The decision was announced on Friday evening, write De Tijd and L’Echo.
The causes: a structural budget deficit and associated rising debt.
Budget Minister Sven Gatz (Open VLD) promised a balanced budget in 2024, excluding strategic investments, but that balance did not materialize. The government is now aiming for 2026, but 1 billion euros will have to be found for this.
From 205 to 210 percent
During the budget discussions for 2024, Gatz warned that a debt ratio of 205 percent (relative to income) was the maximum ceiling for Standard & Poor’s (S&P) if the Region did not want to risk a rating downgrade. Yet only 150 instead of 600 million euros were saved, and the debt ratio rose to 210 percent.
Gatz said he had discussed the higher debt ratio with the rating agency. But this Friday, S&P decides to lower the rating.
Higher interest rate
This goes from AA- to A+, or from 17 out of 20 to 16 out of 20. The rating agency estimates the chance of repayment to be slightly smaller, which means that lenders can charge higher interest.
The minister expects that the consequences of the rating downgrade will be limited in the short term, but the task will be very difficult in the medium term. “Additional savings will be necessary, strategic investments must be phased out more quickly and new income is required,” he tells De Tijd.
“The budget is a collective responsibility of all ministers,” he continues. “Hopefully the seriousness of the situation will dawn on the entire government.”
