C 334/4
EN
Official Journal of the European Union
1.9.2022
(11)
The Commission published the 2022 country report for Belgium on 23 May 2022.
It assessed Belgium’s progress in addressing the relevant country-specific recommendations adopted by the Council in 2019, 2020 and 2021, and took stock of Belgium’s implementation of the recovery and resilience plan, building on the recovery and resilience scoreboard.
On the basis of that analysis, the country report identified gaps with respect to those challenges that are not addressed or only partially addressed by the recovery and resilience plan, as well as new and emerging challenges, including those emerging from Russia’s invasion of Ukraine.
It also assessed Belgium’s progress in implementing the European Pillar of Social Rights and in achieving the Union headline targets on employment, skills and poverty reduction, as well as progress in achieving the United Nations Sustainable Development Goals.
(12)
On 23 May 2022, the Commission issued a report under Article 126(3) of the Treaty.
That report discussed the budgetary situation of Belgium, as its general government deficit in 2021 exceeded the Treaty reference value of 3 % of gross domestic product (GDP), while its general government debt exceeded the 60 %-of-GDP Treaty reference value and did not respect the debt-reduction benchmark.
The report concluded that the deficit and debt criteria were not fulfilled.
In line with the communication of 2 March 2022, the Commission considered, within its assessment of all relevant factors, that compliance with the debt-reduction benchmark would involve an overly demanding frontloaded fiscal effort that could jeopardise growth.
Therefore, in the view of the Commission, compliance with the debt-reduction benchmark is not warranted under the current exceptional economic conditions.
As announced, the Commission did not propose to open new excessive-deficit procedures in spring 2022 and will reassess whether it is necessary to propose the opening of such procedures in autumn 2022.
(13)
In its Recommendation of 20 July 2020 (11), the Council recommended Belgium to take in 2020 and 2021 all necessary measures, in line with the general escape clause, to effectively address the COVID-19 pandemic, sustain the economy and support the ensuing recovery.
It also recommended Belgium to pursue, when economic conditions allow, fiscal policies aimed at achieving prudent medium-term fiscal positions and ensuring debt sustainability, while enhancing investment.
In 2021, according to data validated by Eurostat, Belgium’s general government deficit fell from 9,0 % of GDP in 2020 to 5,5 %.
The fiscal policy response by Belgium supported the economic recovery in 2021, while temporary emergency measures declined from 4,4 % of GDP in 2020 to 2,9 % in 2021.
The measures taken by Belgium in 2021 were in line with the Council Recommendation of 20 July 2020.
The discretionary budgetary measures adopted by the government in 2020 and 2021 were mostly temporary or matched by offsetting measures.
At the same time, some of the discretionary measures adopted by the government over the period 2020 to 2021 were not temporary or matched by offsetting measures, mainly consisting of permanent increases in minimum pensions and health sector wages.
According to data validated by Eurostat, general government debt fell from 112,8 % of GDP in 2020 to 108,2 % of GDP in 2021.
(14)
The macroeconomic scenario underpinning the budgetary projections in the 2022 Stability Programme is favourable.
The government projects real GDP to grow by 3,0 % in 2022 and 1,9 % in 2023.
By comparison, the Commission’s 2022 spring forecast projects a lower real GDP growth of 2,0 % in 2022 and 1,6 % in 2023, mainly due to the earlier cut-off date for the macroeconomic projections underlying the 2022 Stability Programme, which was before the start of Russia’s war of aggression against Ukraine.
In its 2022 Stability Programme, the government expects that the headline deficit will decrease to 5,2 % of GDP in 2022 and to 3,6 % in 2023.
The decrease in 2022 mainly reflects the solid growth in economic activity and the unwinding of most emergency measures.
According to the 2022 Stability Programme, the general government debt-to-GDP ratio is expected to (marginally) decrease to 108,0 % in 2022, and to rise to 108,8 % in 2023.
Based on policy measures known at the cut-off date of the forecast, the Commission’s 2022 spring forecast projects a government deficit for 2022 and 2023 of 5,0 % of GDP and 4,4 % respectively.
In 2022, this is in line with the deficit projected in the 2022 Stability Programme, despite the less favourable macroeconomic scenario in the Commission’s 2022 spring forecast, as the budgetary projections in the 2022 Stability Programme take into account a technical correction reflecting the budget impact of the consequences of Russia’s war of aggression against Ukraine in 2022 only.
In 2023, the Commission’s 2022 spring forecast projects a higher general government budget deficit, mainly due to a less favourable macroeconomic scenario and measures not yet specified in the outer years of the 2022 Stability Programme.
The Commission’s 2022 spring forecast projects a broadly similar general government debt-to-GDP ratio of 107,5 % in 2022 but a lower ratio of 107,6 % in 2023, reflecting the lower increase in the GDP deflator in the 2022 Stability Programme.
According to the Commission’s 2022 spring forecast, the medium-term (10-year average) potential output growth is estimated at 1,4 %.
However, that estimate does not include the impact of the reforms that are part of the recovery and resilience plan and can boost Belgium’s potential growth.
(11) Council Recommendation of 20 July 2020 on the 2020 National Reform Programme of Belgium and delivering a Council opinion on the 2020 Stability Programme of Belgium (OJ C 282, 26.8.2020, p. 1).