Belgian parties set for marathon talks after downgrade

26th November 2011, Comments 0 comments

Talks among six parties trying to fix a deficit-cutting budget for Belgium after a crushing credit-rating downgrade could run through the night, party sources said early Saturday.

After ratings giant Standard and Poor's downgraded Belgium late Friday, outgoing Prime Minister Yves Leterme called for a deal on its 2012 budget by week-end.

Leterme fears a rout on markets when they re-open on Monday if feuding Flemish and French-speaking politicians cannot agree a way forward on deep public spending cuts.

Borrowing costs have also risen sharply for Belgium over the past week as pressure mounted to say how it would get back within the allowable deficit three-percent-of-GDP threshold next year, before a mid-December EU deadline.

Leterme, 19 months into his caretaker premiership, said rival party leaders, had to find a solution by Sunday night.

King Albert II has urged them earlier this week to try again after Leterme's expected replacement Elio Di Rupo offered to quit.

Sources close to the talks told reporters that participants were conscious of the stakes.

But they warned that there was much to be worked through if deep-held differences were to be bridged -- particularly on welfare spending and tax rises.

"The downgrade was expected over the last few days anyway, so it's not a wake-up call," one told AFP, on condition of anonymity.

"It's about making the right choices for this country -- everybody has to be a little bit patient here."

Standard and Poor's downgraded Belgium's credit rating by one notch to AA on Friday over concerns about the country's failure to form a government 19 months after elections, its debt level and slowing growth.

Ratings agencies had long warned Belgium that the political impasse, could hit the credit score of a country whose debt is nearly as big as its annual national output.

© 2011 AFP

0 Comments To This Article