Belgian Premier Di Rupo Renews Pledge to Make Extra Budget Cuts

Belgian Prime Minister Elio Di Rupo reiterated a pledge to make extra budget cuts amid slower economic growth while calling on the European Union to step up efforts to bolster the region’s economy.

“We will take additional measures,” Di Rupo told reporters yesterday in Luxembourg without elaborating. “But we think Europe should also preoccupy itself with economic growth and job creation. This complements budgetary rigor.”

Di Rupo won a reprieve from speeded-up EU deficit sanctions on Jan. 11 after freezing 1.3 billion euros ($1.7 billion) of spending before a budget review next month. He has pledged to cut the deficit to less than 3 percent of gross domestic product this year, as required by the EU.

Standard & Poor’s on Jan. 13 affirmed the country’s AA long-term credit rating, noting the government’s “commitment to its budgetary targets” and the additional cuts taken this month, even as the ratings company downgraded nine other euro- area nations. S&P assigned Belgium a negative outlook, indicating at least a one-in-three chance that the rating will be cut in 2012 or 2013.

The six-party Belgian coalition led by Di Rupo in November unveiled a 2012 budget based on a growth forecast of 0.8 percent that contained 11.3 billion euros of spending cuts and tax increases to pare the deficit to 2.8 percent of GDP. Since then, Budget Minister Olivier Chastel has said growth will slow to between zero and 0.5 percent, forcing Di Rupo to cut even deeper.

‘Certainly Lower’

“We will have to re-look at the growth rate,” Di Rupo said after meeting with Luxembourg Premier Jean-Claude Juncker. The 0.8 percent growth projection will be revised to “another rate, certainly lower.”

Juncker said the euro area must find ways to boost economic growth while tightening government budgets because the region risks economic stagnation. The euro region is “on the verge of a recession, albeit a technical one,” Juncker said.

‘‘There’s no alternative to an approach of budget consolidation, but attention also needs to be paid in Europe to a real policy of growth,” said Juncker, who also leads the group of euro-area finance ministers.

To contact the reporter on this story: Jonathan Stearns in Luxembourg at jstearns2@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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