Belgian Prime Minister Alexander De Croo tearfully resigned on June 9 after his Liberal Party (Open VLD) performed poorly in the elections, receiving less than 7% of the vote.
Opinion polls expected the far-right to win, but the right-wing nationalist New Flemish Alliance retained first place with 22 percent. The leader of the right-wing Flemish Interests Party came in second place with 17.5 percent of the vote. The election results sparked new coalition talks in a country deeply divided by language and regional identity.
Here's another blow: Belgium's rating has been downgraded
So far, the main parties have not entered into a coalition with the Flemish Interests Party, but this may change. Although a new Belgian government is expected to be formed this year, Belgium has a tradition of protracted negotiations.
After the 2019 elections, Belgium did not form a government for a long time. Alexander De Croo was sworn in as prime minister of the seven-party government known as Vivaldi's “coalition” after 652 days of voting, and internal disputes torpedoed the proposed reform agenda, including tax plans that had to be abandoned last year.
Meanwhile, Moody's downgraded Belgium's debt rating from stable to negative on Friday.
Which until now was “Aa3” – was explained in his article Economics. According to the credit rating agency, the reclassification reflects the risk that the next government will not be able to implement measures to stabilize the debt burden.
The credit rating agency currently rates Belgium's creditworthiness at seven levels above “junk”, which is equivalent to… Fitch With its rating, it has already changed Belgium's outlook to negative in March 2023 – she recalled Bloomberg.
Brussels faces serious problems
Because of rising public spending and costs associated with an aging population, Belgium's debt ratio has been higher than that of the eurozone for years. According to forecasts, the country's burdens will continue to grow: Scope predicted in April that by 2028 it will have the third-highest budget deficit in Europe, after Greece and Italy, and will exceed 5 percent of GDP.
The Belgian central bank has warned that the country's public finances remain a cause for concern and that the financial outlook is “far from rosy.”
According to his estimates in March, the next government would have to reduce the budget balance by about 2.5 billion euros (1,000 billion forints) annually just to stabilize the deficit.
They get a reprieve, but time is running out
Given the delay in forming the government, the European Commission last month accepted Belgium's request to submit its budget plan by December 31 at the latest, a federal government official said, according to Bloomberg.
The European Union has placed Belgium, along with France and five other countries, under an excessive deficit measure (excessive deficit measure) in order to impose stricter budget discipline, which requires keeping the deficit below 3 percent of GDP.
Belgium was supposed to submit its medium-term budget and structural plans by September 20th, and the draft budget by October 15th.
(Cover photo: Alexander De Croo on June 27, 2024 in Brussels. Photo: Pierre Marco Tacca/Getty Images)
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