Council Opinion of 22 January 2002 on the updated stability programme of Belgium, 2002-2005
Date: 2002-01-22
Institutions: Council of the European Union
Subjects: Belgium, Economic and Monetary Union, economic policy, economic stabilisation, gross domestic product

C 33/6

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Official Journal of the European Communities

6.2.2002

The Council notes that the government finance projections rely
on a revenue-to-GDP ratio which is clearly higher than that of
most other Member States. Therefore, the Council encourages
the Austrian authorities to consider a stronger than planned
reduction in the revenue ratio, accompanied by an equivalent
reduction in the expenditure ratio. A decisive decline in the tax
burden, especially on labour, would be instrumental
in
rendering government finances more conducive to employment
and output growth. In the short-term, the Council invites the
Austrian Government to implement the reduction in non-wage
labour cost, already postponed by one year, as planned in
2003.

that

considers

furthermore

the Council

In particular,

the Austrian
The Council
Government should continue the ongoing structural reforms
and enhance its efforts in the pension system and the health
care sector, as recommended in the broad economic policy
the Austrian
guidelines.
Government
to consider measures with a view to further
raising the low effective retirement age and to encouraging
in particular of older workers
labour market participation,
and women. The Council also encourages
the Austrian
Government to continue with the reforms of product, labour
and capital markets, with a view to enhancing competition,
fostering the provision of risk capital and improving entrepre-
neurial dynamism.

invites

COUNCIL OPINION

of 22 January 2002

on the updated stability programme of Belgium, 2002-2005

(2002/C 33/06)

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 22 January 2002 the Council examined the 2001 update of
the stability programme of Belgium, which covers the period
2002-2005.

In 2000, real GDP growth was particularly strong, reaching
4 %, driven by domestic demand and buoyant exports; the

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

general government accounts reached a surplus of 0,1 % of
GDP ahead of schedule, while the government debt was
reduced by 5,7 % percentage points to 109,3 % of GDP.

In 2001, the economy suffered from the general economic
slowdown and real GDP growth decelerated to 1,1 %. The
initial general government budgetary target a surplus of
0,4 % of GDP (including the
from the UMTS
licences) could not be met in 2001, but a surplus of 0,2 %
of GDP was achieved; the government debt ratio is expected
to decline to 106,9 % of GDP.

receipts

The 2001 updated stability programme is based on a macro-
economic scenario assuming a sustained economic recovery
from the second quarter of 2002; real GDP growth is not
expected to exceed 1,3 % in 2002. Real GDP growth is
projected to accelerate in 2003 returning to potential in the
final years of he programme. Due to the 2001-2002 economic
slowdown
general
government balance in 2002 instead of a surplus of 0,3 % of
GDP which was projected in the previous update; then, from
the budgetary adjustment path is expected to be
2003,
resumed, a government
suplus of 0,5 % of GDP being
forecast for 2003, increasing to 0,7 % of GDP in 2005. The
government debt is projected to decline to 88 % of GDP in
2005 as expected in the previous update.

programme

updated

targets

the

a

6.2.2002

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Official Journal of the European Communities

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strict budgetary

appropriate in the case of Belgium, taking into account that the
government debt is still at a very high level; therefore, the
Council welcomes the commitment to maintain a high level
of primary surpluses of around 6 % throughout the period to
in order to achieve this
2005. The Council considers that,
objective,
all parts of
government should be enforced, particularly in the social
security sector and in Entity II, and that clear binding norms
for expenditure control are instrumental
for the budgetary
adjustment. The Council notes that the limit of 1,5 % for the
increase in real
terms of primary expenditures in Entity I
(federal government and social security) has been referred to
in the updated programme. It therefore recommends that this
limit continues to be firmly adhered to in the coming years.

surveillance of

The Council notes that the programme does not provide more
detailed projections of revenues and expenditures, in particular
government investment expenditures, as it was recommended
in its Opinion of 12 March 2001 (1);
in addition, separate
accounts for federal government and social security were not
provided as required under the code of conduct for assessing
general government budgetary developments.

The Council welcomes the structural reforms envisaged in the
2001 update, particularly the tax reforms aimed at reducing
the tax burden and increasing employment as well as the
policies aimed at ensuring the long-term sustainability of
public finances.

surplus

The Council considers that the temporary departure from the
budgetary adjustment path projected in the 2000 update is not
significant and can be justified by a cumulated loss in real GDP
growth reaching 2,6 percentage points over the years 2001 and
2002. The Council notes that such departure took place in the
context of a government
in 2000. The Council
considers, however, that a balanced fiscal position should be
achieved in 2002. The Council notes, moreover, that returning
the stability
to the course outlined in the 2001 update of
economic
from 2003 depends
programme
recovery in the second half of 2002. The Council urges the
Belgian Government to ensure that the previously projected
budgetary adjustment path is resumed in 2003. Given the
still very high level of the government debt and in view of
the challenges in the long term induced by the ageing popu-
lation, the Council recommends that all additional revenues
which might
than expected real GDP
growth are allocated to debt reduction, a recommendation
already made in its previous opinion (1).

stem from better

on strong

The Council notes with satisfaction that the projected general
government accounts remain close to balance or in surplus
throughout the period of the programme and are therefore
the stability and
in conformity with the requirements of
growth pact.

The Council notes
achieving government primary
surpluses above 6 % of GDP per year has been particularly

that

(1) OJ C 109, 10.4.2001, p. 2.