Council Opinion of 15 March 1999 on the stability programme of Belgium, 1999 to 2002
Date: 1999-03-15
Institutions: Council of the European Union
Subjects: Belgium, Economic and Monetary Union, coordination of EMU policies, economic convergence, economic policy, economic stabilisation

C 124/4

EN

Official Journal of the European Communities

5.5.1999

situation. An explicit

programme period when growth is projected to have picked
up. The recent ruling of
the German Constitutional Court,
requiring the indroduction of tax allowances for the children
of married couples, constitutes a clear example of the existence
of budgetary risk over and above those related to the
commitment by the
conjunctural
such risks would be
German government
desirable in view of
In
addition, the Council considers that the German government
should take any measures necessary to avoid a renewed
increase in the government debt ratio and that it would be
desirable to go beyond the 1 % deficit
in 2002,
particularly if economic growth is higher than expected.

to counter
the minimal position aimed for.

level

The Council notes that the successful implementation of the
stability programme hinges on close coordination of actions at
in
all
Germany to pay due regard to this callenge.

levels of government;

the authorities

it encourges

The Council notes that the programme envisages a restruc-
turing of the budget in favour of government investment but
intends to keep overall investment spending as a percentage of
GDP unchaged at
level. The Council
encourages the German Government to give further attention
jeopardising the budgetary
to investment without, however,
targets of the programme.

current

lowel

its

The Council welcomes the reform measures announced in the
programme, in particular in the domains of the pension and
health systems and in public administration, which are key to
sustainable public finances and employment growth, but
considers that they ough to be supported by further supply
oriented policy measures. A determined implementation of the
reforms, in combination with measures aimed at increasing the
flexibility of product and labour markets, as recommended by
the Broad Economic Policy Guidelines and envisaged in the
German structural progress report
for the Cardiff process,
would be conducive to the achievement of the objectives of
the stability programme.

COUNCIL OPINION

of 15 March 1999

on the stability programme of Belgium, 1999 to 2002

(1999/C 124/04)

THE COUNCIL OF THE EUROPEAN UNION,

the Council considers that the programme is consistent with
the Broad Economic Policy Guidelines.

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July
1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic
policies (1), and in particular Article 5(1) and (2) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 15 March 1999,
the Council examined the stability
programme of Belgium, which covers the period 1999 to
2002. The Council notes that the programme aims at further
reducing the general government deficit and debt as percent of
GDP, by maintaining the pace of the fiscal consolidation effort
pursued under the second convergence programme. Moreover,

(1) OJ L 209, 2.8.1997, p. 1.

that

the budgetary projections of

the
The Council notes
programme are based on a prudent macroeconomic scenario
forecasting real GDP growth of 2,4 % for 1999 and 2,3 % per
year, for the period 2000 to 2002. Under this scenario, the
general government deficit is projected to fall to 0,3 % of GDP
in 2002 and the debt ratio is expected to decline by about 11
percentage points between 1998 and 2002. The considerable
improvement in the macroeconomic performance realised in
Belgium in recent years, characterised by low inflation,
declining interest rates, wage moderation and good export
performance, suggests that the projected growth rates should
be attainable.

The Council commends the emphasis given in the programme
on maintaining annual primary surpluses at 6 % of GDP as a
central element of the strategy for budgetary consolidation and
debt reduction; the achievement of high primary surpluses has
been the anchor of budgetary policy in Belgium in recent years
and their contribution to further
in
particular the steady decline in government debt, will remain
decisive in the medium-term. The Council notes that
the
stability programme considers that no additional discretionary
measures will be necessary to achieve this target, assuming that

fiscal consolidation,

5.5.1999

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Official Journal of the European Communities

C 124/5

the measures of permanent nature already adopted will
continue to provide a sufficient yield;
this policy option
seems credible to the Council.

fluctuations. Therefore,

The Council considers that the underlying budgetary position
corresponding to a deficit of 0,3 % of GDP for the year 2002 is
sufficient to provide a safety margin to prevent the deficit from
breaching the 3 % of GDP threshold as a result of normal
cyclical
the budgetary medium-term
the Belgian stability programme is in conformity
target of
with the requirements of
the Stability and Growth Pact.
However, fiscal consolidation in Belgium needs to be pursued
beyond the horizon of the programme in order to ensure the
continuation of the decline in the debt ratio and to respond to
longer term issues in particular those stemming from the
ageing of population.

the
The Council commends the affirmed determination of
Belgian Government to adopt corrective measures in case any
deviation from the norm set for the primary surplus should
occur;
it also notes that the stability programme defines a
realistic rule for accelerating the deficit reduction in case of
higher than expected growth. It urges the Belgian authorities
to monitor
the situation of public finance and take all
necessary measures in order to ensure the achievement, at
levels, of the objectives set in this area.
federal and regional

the planned fiscal
The Council notes with satisfaction that
consolidation effort will be accompanied by measures aimed
at reducing the overall tax burden and labour costs, through
the indexation of income tax brackets and the reduction in
social security contributions paid by employers. However, the
Council considers that efforts should be pursued in order to
further alleviate the tax burden in Belgium.

It also notes that the stability programme provides for a margin
for an annual increase in real primary expenditure of 1,5 %.
The Council acknowledges that
increased
resources to the current low level of government investment
would enhance the potential of Belgian economy. It encourages
the Belgian authorities to proceed further in introducing and
implementing the necessary structural reforms in order to
improve the functioning of labour and product markets and
the quality of public expenditure.

the allocation of

The Council notes that the successful implementation of the
stability programme hinges on the close coordination of
actions at all
it encourages the auth-
orities in Belgium to continue their close cooperation to this
end.

levels of government;

COUNCIL OPINION

of 15 March 1999

on the stability programme of Luxembourg, 1999 to 2002

(1999/C 124/05)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulaltion (EC) No 1466/97 of 7
July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic
policies (1), and in particular Article 5(1) and (2) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 15 March 1999,
the Council examined the stability
programme of
the period
the
1999-2002. The Council notes with satisfaction that
government financial accounts will continue te be in surplus
throughout the period covered by the programme, while the

Luxembourg, which covers

(1) OJ L 209, 2.8.1997, p. 1.

government gross debt to GDP ratio will remain very low. The
Council notes that, from a formal point of view, the stability
programme is only partially in line with the agreed code of
conduct on the content and format of stability and convergence
programmes. The Council considers that the programme is
consistent with the Broad Economic Policy Guidelines.

as

takes

stability programme presents

three macroeconomic
The
scenarios for the period 1999 to 2002. Under the central
macroeconomic scenario, which for reasons of prudence the
programme
finance
projections, real GDP growth is estimated at 3,4 % for 1999
rising to 3,7 %, on average, for the period 2000 to 2002. The
least favourable scenario forecasts GDP growth of 2,8 % for
1999 and 3,0 % for the period 2000 to 2002, while growth
under the most favourable scenario is projected to reach 4,0 %
in 1999 and 4,5 % during 2000 to 2002.

the public

the basis

for

The Council considers that
the macroeconomic framework
presents, under the three alternative scenarios, a range of
plausible assumptions for GDP growth, which are in line
with the record of past performance and the long-term