Belgium will cut spending, raise taxes and sell state assets as part of a 2013 budget deal that aims to reduce debt to 100 percent of gross domestic product, the government said.
The budget will reduce the deficit to 2.46 percent of GDP, including a structural shortfall of 1.8 percent, the government said today in Brussels. The deal calls for 1.4 billion euros ($1.8 billion) in structural adjustments to lower the deficit, along with about 1 billion euros in one-off asset sales over the next year to meet the debt target.
“Budget discipline is not a goal in itself,” Prime Minister Elio Di Rupo said at a press conference in Brussels. Rather, it’s “a means to overcome the crisis,” he said.
Belgium’s budget deficit surpassed European Union targets last year as a shrinking economy curbed tax revenue and money was used to replenish Dexia SA (DEXB)’s capital. The deficit widened to 3.9 percent of GDP in 2012 from 3.7 percent the year before, the Brussels-based National Bank of Belgium said in a March 28 statement.
The Belgian economy shrank 0.2 percent last year. Di Rupo said the 2013 budget aims to address a “difficult” situation, meet European targets and help small and medium-sized businesses.
“Since November 2012, the deterioration of economic growth and thus the drastic decrease in receipts has had a considerable impact on our public finances,” Di Rupo said. Today’s budget agreement aims to “reinforce the fundamentals that are necessary to leave the crisis,” he said.
Belgium will aim to complete the asset sales this year, Finance Minister Koen Geens told reporters today. He declined to give details of the planned sales so as not to affect pricing.
The Belgian Parliament will need to approve proposed tax measures, Geens said. Most of the other measures won’t require legislative action.
“There will be no major hurdle in order to realize these measures,” Geens said. “As far as the tax measures are concerned, I will need new legislation before the summer.”
Belgium is aiming to achieve “structural equilibrium” in its finances by 2015, Geens said.
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