Fiscal Consolidation in Belgium: How Much and by What Means?

December 19, 2023

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Format: Chicago

Yu Ching Wong. Fiscal Consolidation in Belgium: How Much and by What Means?, (USA: International Monetary Fund, 2023) accessed November 21, 2024

Summary

Belgium is facing higher structural deficits and rising debt after the pandemic and energy crisis. Fiscal consolidation is needed to lower inflation, rebuild buffers, reduce debt, and preserve Belgium’s social contract. While designing an appropriate fiscal consolidation path involves trade-offs, an ideally front-loaded and significant adjustment to achieve a medium-term structural balance would reduce public debt towards the 60 percent debt threshold, significantly reducing vulnerabilities. Experiences in other countries and in the past in Belgium show that while ambitious, such an adjustment is achievable. Comparisons with peers show that rationalizing and increasing the efficiency of social benefits and the public wage bill would need to be at the core of the consolidation effort. All federal entities should share the burden of the adjustment, in a coordinated manner, with accountability at all levels of government, and within a credible and clear multi-year consolidation plan. Comprehensive spending reviews would help target budgetary saving. To mitigate the growth impact in the near term and boost potential growth, public investment should be preserved, and the adjustment should go together with structural reforms to increase labor force participation and productivity.

Subject: Expenditure, Fiscal consolidation, Fiscal policy, Fiscal stance, Government debt management, International organization, Monetary policy, Public debt, Public financial management (PFM)

Keywords: Budget, Categories Between Belgium, Deficit and debt, Europe, Federal and subnational public finances, Fiscal consolidation, Fiscal consolidation in Belgium, Fiscal consolidation path, Fiscal federalism, Fiscal policy, Fiscal stance, Global, Government debt management, Government expenditures, Major spending category, Social contract

Publication Details

Pages:

20
Volume:

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DOI:

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Issue:

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Series:

Selected Issues Paper No. 2023/064
Stock No:

SIPEA2023064
ISBN:

9798400264283
ISSN:

2958-7875

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