The budget review has again passed almost without a hitch in Belgium. However, this is not because the Belgian state budget is in such good shape. Together with 21 other economists, Kevin Spiritus, Assistant Professor of public finance at the Erasmus School of Economics, raises the alarm in an article that appeared in De Tijd.
The government does not seem to be worried: all kinds of initiatives are being put forward to increase public spending: permanent reduction of the tax burden, salary increases within the government and plans to increase purchasing power. However, major reforms are needed: the government has a primary deficit of 3% of GDP and the Belgian Planning Bureau has calculated that this will rise to 4.7%. The Planning Bureau has an important caveat here: this increase is expected to continue in the coming years, which means that it cannot be explained solely by covid or the war in Ukraine.
Tackling rising government debt
Spiritus argues that, if policies remain unchanged, this budget deficit will increase significantly. Partly because of the ageing population, the public debt can be expected to increase from 104 percent to 130 percent of GDP in 2030. To turn the tide, Spiritus and his colleagues argue that major interventions are needed. In the article, they make a number of suggestions. These include setting a multi-year trajectory, taking measures to increase the employment rate and reviewing the pension and healthcare system.