The International Monetary Fund warns of the rise in Belgian public debt
Brussels, December 17 / WAM / The International Monetary Fund warned of the widening fiscal deficit and rising public debt in Belgium, calling for decisive measures to be taken to confront the challenges ahead.
In an annual assessment of the Belgian economy issued today, the International Monetary Fund praised its strength and ability to withstand the current policies and ongoing reforms in the areas of taxes, pensions, the labor market, and health care. However, it stressed that these efforts are insufficient in light of the increasing pressures resulting from global trade tariffs, the requirements of environmental transformation, and the rise in defense spending.
The report expected that public debt would continue to rise until 2030 despite the reforms, driven by factors, most notably population aging, which weakens growth prospects and raises the cost of public spending. It expressed concern about the federal government’s optimism about the possibility of reducing the deficit to 3% of GDP by 2029, and warned of the risks of losing market confidence based on previous international experiences that witnessed a sudden decline in investor confidence.
The Fund called for improving the efficiency of spending in the areas of pensions, health care, and education, and enhancing coordination and cooperation between federal authorities and regions to ensure better planning for public investments.
On the tax level, he recommended transferring part of the tax burden from labor to capital, and proposed reducing current capital gains tax exemptions to increase revenues and achieve greater justice.
The head of the Fund’s mission to Belgium, Jean-François Dauphin, said that the existing tax incentives need careful review, noting that they amounted to 6.1% of the gross domestic product in 2021, equivalent to about 38 billion euros by 2025. He wondered about the extent to which these measures are consistent with public policy priorities and their effectiveness in terms of cost, stressing that reforming useless exemptions and incentives can achieve significant financial savings.
Regarding the labor market, he stressed the importance of deepening cooperation with European Union countries in the areas of the single market, financial integration and unifying energy markets, warning that failure to act could lead to more severe economic repercussions for Belgian citizens.
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