Belgium could still face EU fine over deficit

Belgium risks being fined for missing its 2012 budget target and needs a convincing plan to rein in its deficit this year and next without relying on one-off measures, the Economic Times quotes an EU official as saying yesterday. Belgium’s government had aimed to reduce the public sector deficit to 2.8% of gross domestic product last year, below the EU’s 3%, from 3.7% in 2011. However, a €2.915 billion contribution to the bailout of Franco-Belgian lender Dexia pushed the gap to at least 3.7%. Without that, it was still slightly above 3% according to new calculations by the federal planning bureau, ministers said yesterday. The EU source said the European Commission’s main aim was for Belgium to take measures of a permanent nature that cut the deficit on a structural basis. The commission will look into Belgium’s case after its spring forecasts due early in May. “There will have to be some one-off measures as well. They cannot do everything structurally. It is quite demanding and they would have to present a convincing plan for next year as well,” said the source, who spoke on condition of anonymity. Prime minister Elio Di Rupo told parliament yesterday the deficit figure was “hovering” around 3%, with the Institute of National Accounts to present an official number by the end of the month. Belgium did little in the way of budgetary consolidation in 2010 and 2011, because for most of that time it was without a fully fledged government after an inconclusive election. Last year, it pushed through €14.3 billion of savings. A further €3.4 billion package is designed to trim the deficit to 2.15% of GDP this year. Budget talks are continuing.