Introduction 

The economic and financial crisis caused a serious deterioration in public finances. Today, 23 of the 27 European Union members are subject to an excessive deficit procedure, and Belgium has been among that group of countries since 2 December 2009.

In recent months, in the wake of the economic and financial crisis, the creditability of the euro and Economic and Monetary Union has been in doubt. In response to these pressures, the European authorities decided to reform economic governance, to revamp the Lisbon Strategy (EU2020) and to set up the European Semester. This new ex ante coordination strengthens the consistency between the national reform programme - reflecting the main lines of economic and social policy – and the stability programme, which sets out the strategy for the sustainable consolidation of public finances.

It is against this new backdrop that the Belgian government is presenting its national reform programme and the stability programme.

On the basis of the figures published by the National Accounts Institute (NAI), the budget outcomes for the year 2010 are significantly more favourable than the target initially fixed in the January 2010 stability programme. In fact, with a deficit of 4.1 % of GDP in 2010, compared to 5.9 % in 2009, and a structural improvement ranging between 0.8 % of GDP and 1.3 % depending on the methodology, Belgium is a year ahead of the initial path for the consolidation of public finances. In addition, the rise in the public debt in 2010, amounting to 0.6 % of GDP, bringing the total to 96.8 % of GDP, is probably the smallest in the euro area.

True, this improvement in the general government budget balance is due to the stronger than expected revival in economic activity which, following a 2.7% decline in GDP in 2009, recorded 2.1 % growth, thus taking full advantage of the dynamism of the global economy and being supported by the good performance of the labour market, particularly following the crisis measures taken by the Belgian government. As well as fiscal prudence, the implementation of the measures provided for in the 2010-2011 multi-annual budget, with an impact of 1 % of GDP in 2011, and the measures taken by the federated entities are also contributing to the marked improvement in Belgian public finances.

On 24 March 2011, the federal government approved the 2011 budget containing fiscal measures amounting to 0.6 % of GDP. The Belgian government intends to respect its commitments in relation to the excessive deficit procedure, In particular, under this new stability programme, the Belgian government is adhering firmly to its commitment to reduce the public deficit below 3 % of GDP by 2012 at the latest and to restore balanced public finances in 2015. The proposed consolidation path is actually faster than the one laid down in the January 2010 stability programme.

With a target deficit of 3.6 % of GDP in 2011, the Belgian government aims to stabilise the endogenous public debt and start reducing the general government debt ratio by 2012. Moreover, if the economic environment proves more favourable than expected under this programme, the federal government is resolved to use the resulting additional revenue and decline in expenditure to reduce the deficit more quickly.

Apart from the fiscal measures, this consolidation of public finances will be based mainly on the implementation of economic and social reforms designed to boost the employment rate and sustainable, inclusive growth, in line with the EU2020 Strategy and the Euro Plus Pact. The initial decisions on the subject are explained in more detail in this stability programme and in the national reform programme.

The caretaker government is fully committed to adhering to the path mapped out in that stability programme. It is a prudent path.

It is for the next government to update the path, if appropriate, and to define the specific measures to ensure the sustainable consolidation of public finances.