Belgian Deficit Exceeds EU Target on Shrinking Economy, Dexia

Belgium’s budget deficit surpassed the European Union’s target last year as a shrinking economy curbed tax revenue growth and taxpayer funds were used to replenish Dexia SA’s capital following its dismantlement.

The budget deficit widened to 3.9 percent of gross domestic product from 3.7 percent a year earlier, the Brussels-based National Bank of Belgium said today in a statement. The shortfall compares with the government’s own target of 2.8 percent and a limit of 3 percent under the EU’s excessive deficit procedure. Public debt climbed to 99.6 percent of GDP from 97.8 percent in 2011.

The Belgian economy shrank 0.2 percent last year, curbing revenue from sales taxes and levies on investment income and mortgage registrations. Federal tax receipts rose about 6.1 percent, 0.4 percent short of the amount needed to meet the deficit target, former Finance Minister Steven Vanackere said on Jan. 17. Primary expenditure rose 4.6 percent to a record 51.3 percent of GDP. The deficit figure also includes 2.92 billion euros ($3.74 billion) spent on Dexia preferred stock on Dec. 31, equivalent to about 0.77 percent of GDP.

The national bank released the figures on its website today.

To contact the reporter on this story: John Martens in Brussels at jmartens1@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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