**This week, our PODCAST “Déclic – Le Tournant” takes a look at the public finances of the “Belgian house” and the least we can say is that the situation is delicate and even critical if we look more particularly at the south of the country. We take a look at the situation with Xavier Debrun, head of the research department of the National Bank of Belgium (BNB).**
**An unsustainable situation**
When asked to summarise Belgium’s budgetary situation in a few words, Xavier Debrun’s answer is clear: “It is an unsustainable situation, which cannot continue in the long term. The debt is currently equivalent to 105% of GDP and, even more seriously, in terms of deficits, we are at the bottom of the European class. The deficit, as a reminder, is the difference between what comes into the State’s coffers and what it needs for its expenditure. The annual hole, at the moment, is around 4 – 5%. You can’t claim to stabilise your debt ratio with such deficits,” says Xavier Debrun, “it’s not possible! It’s simple arithmetic, budgetary limits are imposed on everyone, even the states”.
That said, when we look at the detailed figures, we see that the situation is not the same for all the country’s entities. It is much more critical for Wallonia than for Flanders. If we compare, for each of the entities, the debt to revenue… the ratios are quite different. In Flanders, the debt represents 58% of the revenues, in Wallonia the debt is equivalent to 257% of the revenues. That is almost 5 times more.
**Flanders – Wallonia: the big gap**
If we now look at the figures: Wallonia’s debt is increasing at a staggering rate. In 2015 it represented about 8 billion €, in 2024 it should reach 40 billion, with deficits close to 20% at the moment. And the problem, says Xavier Debrun, is that there are also underlying trends affecting the public finances of all developed countries at the moment: “ageing, the necessary fight against global warming, de-globalisation which makes products more expensive and the return of war to our doorstep, which once again requires greater military spending”.
So, let’s imagine the worst case scenario… which is unfortunately not unlikely: interest rates (which have just risen from 0 to 3% in a few months) rise again, the rating agencies are worried about Wallonia’s solvency (and its ability to reform in time), they downgrade Wallonia’s rating… and thus also that of the Wallonia-Brussels Federation (the French Community). As a result, the two entities have to pay more and more to refinance themselves, which increases the debt even more… which would lead to an untenable ‘snowball effect’.
“We are not there yet”, reassures the BNB economist, “but it is time to act and make choices. We are facing a turning point. We still have the opportunity to negotiate it ourselves by reducing the speed… but if we do nothing we will see a stupid and nasty austerity imposed on us. So we are not yet in the situation of Greece in 2010. But to deny the problem or to consider it minor is obviously to stick your head in the sand.
**If you want to understand the situation in detail and, above all, to explore possible solutions to make better use of the resources available and to restore budgetary balance, take 45 minutes to listen to this new episode of “Déclic – Le Tournant”.**
Staggering numbers. A similar thing was discussed in a thread yesterday. I don’t see Flemish people accepting national austerity measures given the huge gap, so a lot of fuel for the separatist fire is coming our way.
Just staggering numbers, with such a high deficit and climbing interest rates Walonia is seriously at risk of getting into a debt spiral that they won’t be able to break out of. On top of that they are currently still benefiting from solidarity contributions which will start to decline next year. In the long run their income will drop by 12%.
They need a major reform of the financing laws AND huge savings in order to avoid the worst. Bankruptcy will be almost impossible to avoid unless the federal level steps in.
Jezus so since letting Wallonia default will be worse for Belgium than pulling them out, this is essentially putting Flanders for a fait accompli and a pretty clear example of moral hazard in my book.
Either the IMF swoops in and takes over, or Flanders will buy its confederation/independence if “those” parties get into power in ’24. I don’t see a “moderate” solution here. Either way someone’s going to be hurting a lot at the end of this.
Can’t we sell Wallonië to Engië or something?
Maybe we flanders can buy them out in return for some more seats in the federal government. At least we can then run the country properly.
I read somewhere that if you would split the country tomorrow and Wallonia would become its own country it would be considered worse-off than Greece in 2008.
I don’t understand why we accept this artificial division between the region. No, Wallonia isn’t fuck. **We are all fucked**. Any debt incurred by Wallonia is debt incurred **by all of us** Wallonia can’t default on its loans in a vaccuum. This isn’t about the neihbours’ house flooding and the other neighbour says *well gee too bad*. The whole damn neihhbourhood is going down to Atlantis when that happens.
that seems fine. No way that can possibly blow up in all of our faces and sink the entire country xD
Not saying there doesn’t need to be more accountability on spending by Walloon. But this is all again whipping up some outrage so you vote NVA because it’s their only selling point that differentiates from CD&V and VLD, three parties riding for the corporate overlords. Ditching walloon because they cost money at this point in time would be utter stupidity.
It’s like selling your house and live in a tent to have money for betting.
Mathematically, in the fractional reserve banking system, debt can only grow and grow exponentially if the interest is positive. It is impossible to pay down the debt. Every time money is created a debt larger than the money is created and that is an exponential function that automatically creates an accelerating debt.
Debt is a number punched into a computer owned by bankers. It’s just numbers in computers owned by bankers.
It was Nixon who introduced fractional reserve banking. And people make fun of crypto. 🙄
I aint paying for that
Well if anyone tries anything the civil servant unions will simply hold the whole country hostage again.
I’m all for keeping Belgium as one state, but damn does the fiscal policy of Wallonië make defending this ever more difficult.
Obviously as a Belgian I want to help the regions that are less-off to get out of a bad situation (and there always will be regions less off), but there are some limits. I do get that they are having it economically difficult, making it much harder to resolve the issue, but some transparency and public communication would go a long way instead of this continuously more grim reports every couple of years and seemingly no communication on what is going wrong and what they are trying to resolve it.
Something should be done to resolve this, and that dialogue needs to be held soon and productively. But I fear the egos and the political oppertunism both sides have will just exploit the situation for themselves rather than resolve it.
13 comments
**This week, our PODCAST “Déclic – Le Tournant” takes a look at the public finances of the “Belgian house” and the least we can say is that the situation is delicate and even critical if we look more particularly at the south of the country. We take a look at the situation with Xavier Debrun, head of the research department of the National Bank of Belgium (BNB).**
**An unsustainable situation**
When asked to summarise Belgium’s budgetary situation in a few words, Xavier Debrun’s answer is clear: “It is an unsustainable situation, which cannot continue in the long term. The debt is currently equivalent to 105% of GDP and, even more seriously, in terms of deficits, we are at the bottom of the European class. The deficit, as a reminder, is the difference between what comes into the State’s coffers and what it needs for its expenditure. The annual hole, at the moment, is around 4 – 5%. You can’t claim to stabilise your debt ratio with such deficits,” says Xavier Debrun, “it’s not possible! It’s simple arithmetic, budgetary limits are imposed on everyone, even the states”.
That said, when we look at the detailed figures, we see that the situation is not the same for all the country’s entities. It is much more critical for Wallonia than for Flanders. If we compare, for each of the entities, the debt to revenue… the ratios are quite different. In Flanders, the debt represents 58% of the revenues, in Wallonia the debt is equivalent to 257% of the revenues. That is almost 5 times more.
**Flanders – Wallonia: the big gap**
If we now look at the figures: Wallonia’s debt is increasing at a staggering rate. In 2015 it represented about 8 billion €, in 2024 it should reach 40 billion, with deficits close to 20% at the moment. And the problem, says Xavier Debrun, is that there are also underlying trends affecting the public finances of all developed countries at the moment: “ageing, the necessary fight against global warming, de-globalisation which makes products more expensive and the return of war to our doorstep, which once again requires greater military spending”.
So, let’s imagine the worst case scenario… which is unfortunately not unlikely: interest rates (which have just risen from 0 to 3% in a few months) rise again, the rating agencies are worried about Wallonia’s solvency (and its ability to reform in time), they downgrade Wallonia’s rating… and thus also that of the Wallonia-Brussels Federation (the French Community). As a result, the two entities have to pay more and more to refinance themselves, which increases the debt even more… which would lead to an untenable ‘snowball effect’.
“We are not there yet”, reassures the BNB economist, “but it is time to act and make choices. We are facing a turning point. We still have the opportunity to negotiate it ourselves by reducing the speed… but if we do nothing we will see a stupid and nasty austerity imposed on us. So we are not yet in the situation of Greece in 2010. But to deny the problem or to consider it minor is obviously to stick your head in the sand.
**If you want to understand the situation in detail and, above all, to explore possible solutions to make better use of the resources available and to restore budgetary balance, take 45 minutes to listen to this new episode of “Déclic – Le Tournant”.**
Translated with [www.DeepL.com/Translator](http://www.DeepL.com/Translator) (free version)
Staggering numbers. A similar thing was discussed in a thread yesterday. I don’t see Flemish people accepting national austerity measures given the huge gap, so a lot of fuel for the separatist fire is coming our way.
Just staggering numbers, with such a high deficit and climbing interest rates Walonia is seriously at risk of getting into a debt spiral that they won’t be able to break out of. On top of that they are currently still benefiting from solidarity contributions which will start to decline next year. In the long run their income will drop by 12%.
They need a major reform of the financing laws AND huge savings in order to avoid the worst. Bankruptcy will be almost impossible to avoid unless the federal level steps in.
Jezus so since letting Wallonia default will be worse for Belgium than pulling them out, this is essentially putting Flanders for a fait accompli and a pretty clear example of moral hazard in my book.
Either the IMF swoops in and takes over, or Flanders will buy its confederation/independence if “those” parties get into power in ’24. I don’t see a “moderate” solution here. Either way someone’s going to be hurting a lot at the end of this.
Can’t we sell Wallonië to Engië or something?
Maybe we flanders can buy them out in return for some more seats in the federal government. At least we can then run the country properly.
I read somewhere that if you would split the country tomorrow and Wallonia would become its own country it would be considered worse-off than Greece in 2008.
I don’t understand why we accept this artificial division between the region. No, Wallonia isn’t fuck. **We are all fucked**. Any debt incurred by Wallonia is debt incurred **by all of us** Wallonia can’t default on its loans in a vaccuum. This isn’t about the neihbours’ house flooding and the other neighbour says *well gee too bad*. The whole damn neihhbourhood is going down to Atlantis when that happens.
that seems fine. No way that can possibly blow up in all of our faces and sink the entire country xD
Not saying there doesn’t need to be more accountability on spending by Walloon. But this is all again whipping up some outrage so you vote NVA because it’s their only selling point that differentiates from CD&V and VLD, three parties riding for the corporate overlords. Ditching walloon because they cost money at this point in time would be utter stupidity.
It’s like selling your house and live in a tent to have money for betting.
Mathematically, in the fractional reserve banking system, debt can only grow and grow exponentially if the interest is positive. It is impossible to pay down the debt. Every time money is created a debt larger than the money is created and that is an exponential function that automatically creates an accelerating debt.
Debt is a number punched into a computer owned by bankers. It’s just numbers in computers owned by bankers.
It was Nixon who introduced fractional reserve banking. And people make fun of crypto. 🙄
I aint paying for that
Well if anyone tries anything the civil servant unions will simply hold the whole country hostage again.
I’m all for keeping Belgium as one state, but damn does the fiscal policy of Wallonië make defending this ever more difficult.
Obviously as a Belgian I want to help the regions that are less-off to get out of a bad situation (and there always will be regions less off), but there are some limits. I do get that they are having it economically difficult, making it much harder to resolve the issue, but some transparency and public communication would go a long way instead of this continuously more grim reports every couple of years and seemingly no communication on what is going wrong and what they are trying to resolve it.
Something should be done to resolve this, and that dialogue needs to be held soon and productively. But I fear the egos and the political oppertunism both sides have will just exploit the situation for themselves rather than resolve it.