Budget heading towards deficit

16th October 2007, Comments 0 comments

16 October 2007, BRUSSELS– This year’s budget is ending with a deficit that could run into EUR 1.5 billion (0.5 percent of the GDP). Prime Minister Verhofstadt is investigating the possibility of curbing expenditure.

16 October 2007

BRUSSELS– This year’s budget is ending with a deficit that could run into EUR 1.5 billion (0.5 percent of the GDP). Prime Minister Verhofstadt is investigating the possibility of curbing expenditure.

The outgoing coalitions of liberals and Christian democrats seems to be ending its term on a negative note. Figures finalised by the government yesterday have confirmed that the advance payments of company tax are some EUR 900 million less. This is attributed to factors such as the tax breaks for companies.

That is not all. According to a government source, the total fiscal revenue comes to EUR 1.3 billion less than estimated. The statistics agency of the European Commission already scrapped EUR 150 million from the budget in June because it did not accept the selling of overdue tax debts. There are also a number of other accounting corrections.

Finance Minister Didier Reynders (MR) attempted to put the situation in a positive light. His spokeswoman said yesterday evening that the "advance payments of the third quarter have increased by 10 percent compared with the second quarter and therefore come to an annual growth of 4.74 percent. This is a good result, because that growth figure is higher than the 2.7% growth of the GDP". The government did not state that the budget anticipated an increase of tax revenues of at least 14 percent. In other words: there is clearly a budgetary problem.

The various ministries are also facing a budget gap of about EUR 250 million in total. The majority of this, EUR 200 million, concerns Defence, which received strict orders from Budget Minister Freya Van den Bossche (SP.A) last week to not spend any money without prior permission. 

In a "normal" political situation a government is still capable of adjusting its policy. But the government has only been concentrating on running issues since the end of April and is no longer able to take any new initiatives, although a monitoring committee was appointed from within the government a few weeks ago.

Prime minister Guy Verhofstadt (Open VLD) is still awaiting the final figures that will be available by the end of the week, according to his spokesperson. He and minister Reynders believe that it is still possible to have a deficit of 0.2-percent ( EUR 600 million) instead of 0.5 percent, provided that expenditure is curbed. Reynders already announced that Yves Leterme should take into account the possibility of such a deficit. It is at any rate bad news for the formation: the greater the deficit this year, the greater the efforts required by the new government.

[Copyright Expatica News 2007]
Subject: Belgian news

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