Belgian interim PM urges country to help raise funds

24th November 2011, Comments 0 comments

The Belgian government urged citizens on Thursday to finance the country's debt by subscribing to a government bond as a record-breaking political crisis continues and Belgium's borrowing costs spike.

After a day that saw Belgian borrowing costs soar to 5.423 percent on 10-year bonds, caretaker premier Yves Leterme issued a rare appeal in the press and on radio, saying: "Given the difficulties on the financial markets, we want to increasingly appeal to Belgian savings to finance the debt".

To increase its appeal, the bond being launched on Thursday offers three-, five- and eight-year paper at 3.5 percent, 4.0 percent and 4.5 percent, one point above a previous offer.

The plea comes as Belgium stands in the firing line of markets due to its record-breaking political crisis which took a turn for the worse this week when talks among six parties that agreed to form a coalition broke down over a future budget.

With debt at almost 100 percent of GDP the founding-member of the European Union risks being sucked into the euro crisis.

The European Commission repeated on Wednesday a warning to Belgium to bring its public deficit below 3.0 percent of GDP by 2012 -- rather than the 4.6 percent forecast failing action -- or face a fine running over half a billion euros.

Meanwhile the country was left awaiting a decision by Socialist leader Elio Di Rupo on whether or not he will continue to lead efforts to form a coalition after 529 days without a government, a world record.

Di Rupo handed in his resignation early this week after four-month-long talks broke down over the terms of a budget. Albert II on Wednesday asked him to reconsider.

The parties involved are widely divided over how to trim 11.3 billion euros off the deficit next year and some 20 billion in all by 2015.

Centre-right parties want Di Rupo to pledge more cuts off social welfare benefits and state spending rather than raising taxes.

© 2011 AFP

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