Flanders to fight for own rating
The government of Flanders intends to take further steps to disconnect its credit rating from the one of the federal government, the Minister-President of the government of Flanders Kris Peeters CD&V responded when questioned by Flemish MP Griet Smaers CD&V yesterday in the Flemish Parliament. The ratings bureau Standard & Poor’s cut Flanders’ credit rating in line with that of Belgian’s cut from AA+ to AA last week. S&P admitted that the solvency of Flanders is higher, but that their method did not allow them to award a federated state a higher rating than the federal government. Flemish Budget Minister Philippe Muyters N-VA lamented this ruling, saying: “The S&P report stressed that we had performed better than Belgium, approving the budgetary policy of the government of Flanders, which plans to balance its books in 2011.” Peeters now hopes that the sixth state reform, which has resulted in more powers and fiscal autonomy for Flanders, will serve as a good argument in favour of a separate rating, since the ratings agency also referred to the region’s limited fiscal and financial power. “Following state reform Flanders deserves its own rating. We will take the necessary steps to make that clear,” Peeters said. According to S&P a separate rating would in principle be possible. The Navarra and the Basque regions in Spain are two such examples, but Flanders will be subject to stringent requirements. Whether Flanders will succeed after state reform remains to be seen. But the direct effect of the lower rating on the Flemish budget remains limited, says Peeters. “But the decision is bound to have a concealed effect on businesses ,” he added.