## Belgium: Selected Issues

_IMF Staff Country Reports, March 31, 2020_

## Source details

**Canonical URL:** [Belgium: Selected Issues](https://www.imf.org/en/publications/cr/issues/2020/03/30/belgium-selected-issues-49300)

## Other formats

- [Markdown version](/en/publications/cr/issues/2020/03/30/belgium-selected-issues-49300/index.md)
- [Structured JSON version](/en/publications/cr/issues/2020/03/30/belgium-selected-issues-49300/index.json)
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## Bibliographic details
- Published: March 31, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513538877.002

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### Analysis and model
- Uses a structural stochastic model that "explicitly accounts for the trade-offs between the short-term cost of fiscal tightening and the long-term gains associated with higher fiscal buffers."
- Model frames fiscal policy choices in terms of trade-offs between immediate consolidation costs and increased capacity to respond to future shocks.

### Key findings
- Rebuilding fiscal buffers once the current crisis is over is "essential to helping Belgium confront the next shock from a stronger fiscal position."
- When a government reduces debt, it "increases its capacity to react to shocks later."
- The short-term cost of debt reduction "is, in the case of Belgium, worth the effort as this capacity to smooth future shocks increases future welfare."
- A large capacity to react with fiscal policy "reduces the risk of long-lasting effects of a large crisis."
- Historical data show that in the past, the Belgium government’s reaction to the cycle was "limited to a single event."
- If Belgium could "firmly anchor public debt on a downward path, future governments would be able to offset downturns while keeping debt sustainability concerns under control."

### Policy implications and recommendations
- Adopt and credibly pursue a medium-term fiscal consolidation strategy to rebuild fiscal buffers after the crisis.
- Prioritize debt reduction to increase the government's capacity to respond to future downturns and to limit long-lasting crisis effects.
- Anchor public debt on a downward path to enable future countercyclical fiscal policy while maintaining debt sustainability.

*Source: Belgium: Selected Issues (IMF Staff Country Report)*

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## Content in this bundle

- **Belgium: Selected Issues; IMF Country Report No. 20/92; March 18, 2020**
  - [Belgium: Selected Issues; IMF Country Report No. 20/92; March 18, 2020 (Markdown version)](/-/media/files/publications/cr/2020/english/1belea2020002.pdf.md){rel="alternate" type="text/markdown"}
  - [Belgium: Selected Issues; IMF Country Report No. 20/92; March 18, 2020 (PDF)](/-/media/files/publications/cr/2020/english/1belea2020002.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2020/03/30/belgium-selected-issues-49300_