Belgium will end the 2023 budget year with a deficit that is 6.5 billion smaller than feared when it was drawn up. This is mainly the result of stronger economic growth.
It was once tradition that the budget settlement was presented at a press conference of the federal government, where the Minister of the Budget received flowers. But with the blood-red figures of recent years, there is no longer any reason to do so. A dry end-of-year estimate from the federal government service Policy & Support (BOSA) is what remains.
The federal government ends the year with a deficit of 3.3 percent of gross domestic product (GDP) and the states and municipalities with a deficit of 1.3 percent of GDP. Together this amounts to 4.6 percent of GDP or 26.7 billion euros, according to the first provisional figures from BOSA.
The good news is that this is less bad than expected. Compared to the October 2023 estimate, this is an improvement of 3.4 billion euros. Primary federal expenditure drops by 1.3 billion, because, among other things, the social energy tariff costs less, as does the support for families who heat with oil. Social security also performed 200 million better. The better result of the federal states – 1.3 billion euros – is offset by 400 million euros by a deterioration in the municipalities. This may have to do with the higher investments in the run-up to the municipal elections.
Compared to the initial preparation of the 2023 budget, the improvement is 6.5 billion euros. This is not without significance, because the government and parliament were then concerned with the question of whether the deficit would amount to 5.8 or 6.1 percent of GDP. That discussion, which concerned the interpretation of the agreement on the reform of excise duties on electricity, led to the resignation of Eva De Bleeker (Open VLD) as State Secretary for the Budget.
This strong deviation is mainly due to the economic growth of our country. When drawing up the budget, the Planning Bureau still assumed growth of 0.5 percent in 2023, but it has become 1.5 percent. This also has consequences for the debt ratio: it remains at 105.8 percent of GDP.
The bad news is that despite above-average growth, Belgium is still managing to increase the budget deficit compared to 2022, when a negative balance of 3.5 percent of GDP was recorded. Our country is therefore going against the trend of the euro zone, where the average deficit will fall from 3.6 percent of GDP in 2022 to 3.1 percent in 2023.
For 2024, the European Commission expects a Belgian deficit of 4.9 percent of GDP, which beckons the so-called penalty box that was put away during the crisis years.