Council Opinion of 12 March 2001 on the updated stability programme of Belgium, 2001-2005
Date: 2001-03-12
Institutions: Council of the European Union
Subjects: Belgium, Economic and Monetary Union, economic policy, economic stabilisation, gross domestic product

C 109/2

EN

Official Journal of the European Communities

10.4.2001

COUNCIL OPINION

of 12 March 2001

on the updated stability programme of Belgium, 2001-2005

(2001/C 109/02)

THE COUNCIL OF THE EUROPEAN UNION,

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(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 12 March 2001, the Council examined the 2000 update of
the stability programme of Belgium which covers the period
2001-2005.

In the last two years, real GDP growth was stronger than
expected in the 1999 updated stability programme, reaching
2,7 % in 1999 and 3,8 % in 2000. As a result the general
government deficit
reached 0,7 % of GDP in 1999 and
turned to balance in 2000 according to the latest estimates.
The government debt
ratio to GDP was reduced by 5,5
percentage points to 110,6 % of GDP in 2000. The Council
notes that these results comply with its opinion on the 1999
updated programme as well as with the broad economic policy
guidelines.

the reduction of

remains a high priority. The Council notes

the high government
Council notes that
that,
debt
in order to achieve
according to the updated programme,
high primary surpluses, expenditure control
is expected to
result from applying a limit of 1,5 % to the increase in real
terms in primary expenditure in Entity I (federal government
and social security). It notes also that within this framework,
budgetary margins estimated at 1,3 % of GDP in 2005 are
expected to become available to finance tax cuts and selected
expenditure measures.

The Council acknowledges that after a prolonged period of
needed budgetary restraint, a number of policy areas should
be taken into consideration in Belgium, such as tax alleviation,
particularly on labour, and an active employment policy;
however, the Council considers that control on government
expenditure must still be given the highest priority and urges
the Belgian Government to respect the limit of 1,5 % set for
primary expenditure in real terms already in 2001. The allo-
cation of the budgetary margins should be closely monitored in
order to be consistent with this limit. Furthermore, given the
level of government indebtedness and in view of budgetary
challenges in the long term, the Council recommends that all
additional
than
expected real GDP growth be allocated to debt reduction.

revenues which might

stem from better

The Council commends the structural reforms described in the
updated stability programme in particular those intended to
increase the employment rate as well as the policy aiming at
ensuring the long-term sustainability of public finances.

The 2000 updated stability programme is based on a macro-
economic scenario assuming real GDP growth at
trend,
estimated at 2,5 % in the period from 2001 to 2005; while
this cautious approach is understandable, the Council notes
that, at
forecasts are
currently higher. The updated stability programme projects a
general government surplus of 0,2 % of GDP in 2001 rising to
0,7 % of GDP in 2005 while the government debt ratio is
projected to decline by 22 percentage points of GDP to 88 %
of GDP in 2005.

for 2001 and 2002,

some

least

The Council notes that the projections for the government
balance are considered in the updated programme as objectives
which should be met even in the event that economic activity
were to falter. The Council commends the budgetary consoli-
dation strategy based mainly on the achievement of
large
primary government surpluses, reaching more than 6 % of
GDP per year; this strategy, already successfully implemented
is particularly appropriate in the case of
in recent years,
still very high. The
Belgium where government debt

is

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

2000

the new agreement concluded in
The Council welcomes
Government,
December
communities and regions
in Belgium aimed at ensuring
budgetary adjustment and sustainable public finances in the
medium term at the different levels of government.

between

Federal

the

The Council regrets that no information was supplied in the
stability programme about projected total expenditure and
revenue ratios and specific categories of government expen-
diture such as expenditure for pension and health care as
well as government
investment expenditure. The Council
recommends that more detailed projections are provided in
fully
future
informed assessment.

stability programmes

to allow a

in order

The Council considers that the budgetary results achieved in
Belgium are
already in conformity in 2000 with the
requirement of the stability and growth pact and will remain
so throughout
the period covered by the 2000 updated
programme.