Jan. 12 (Bloomberg) -- Belgium’s king pressed for a new attempt to jump-start coalition talks, ordering the two key party leaders in a 213-day political deadlock to help his mediator in brokering a compromise.
King Albert II sent Johan Vande Lanotte, 55, back into the fray, ignoring the troubleshooter’s Jan. 6 plea to be relieved of the job. Vande Lanotte will hold “privileged talks” with Bart De Wever, leader of the Flemish nationalist N-VA party, and Elio Di Rupo, who heads the French-speaking Socialists, the royal palace in Brussels said yesterday.
“New proposals have been discreetly reviewed by Vande Lanotte and Di Rupo and they haven’t been rejected,” Siegfried Bracke, a member of the N-VA’s strategic council, said on VRT television. “A deepening of the proposed reforms, especially in the social-economic domain, is negotiable for us.”
Belgian debt securities are the world’s worst-performing sovereign debt so far this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies, indicating investors are concerned that the seven-month political impasse will impair Belgium’s ability to keep its debt under control.
Finance Minister Didier Reynders said today that Belgium’s debt load is projected to start falling in 2012 after rising to 98.1 percent of gross domestic product this year. He said earlier this week that the caretaker administration plans to reduce the annual deficit to less than 4 percent of GDP in 2011 from a narrower-than-estimated 4.6 percent last year.
Belgian 10-year bonds rose today following five straight days of declines. The yield on the 3.75 percent security due Sept. 28, 2020, fell 5 basis points to 4.25 percent at 9:50 a.m. in Brussels.
The extra yield investors demand to hold Belgian 10-year debt rather than German equivalents declined to 128 basis points, according to Bloomberg composites. The spread, a measure of the risk of investing in Belgium, reached a euro-era peak of 144 basis points and has expanded from 79 basis points before the June 13 election.
The king’s latest move sought to balance calls from six parties to let Vande Lanotte continue his reconciliation effort and a request from N-VA party leader De Wever, the top vote-getter in the election, for a face-to-face showdown with Di Rupo.
Vande Lanotte, a Socialist from the Dutch-speaking Flemish region, is the author of a constitutional compromise that last week failed to shepherd four Flemish and three French-speaking parties back to negotiations that broke off on Sept. 3.
The mediator should take “any useful initiative aimed at breaking the political impasse as soon as possible,” the palace said in a statement, stopping short of a recommendation to widen the circle of seven parties involved in government talks so far.
In the absence of a full-time government, the king on Jan. 10 told caretaker Prime Minister Yves Leterme’s cabinet to craft a 2011 budget. The government needs to trim the deficit to less than 3 percent of GDP in 2012, as agreed with the European Commission.
Belgium has 20 billion euros ($26 billion) of bonds maturing this year, according to data from the Finance Ministry’s debt agency. The figure excludes securities the treasury bought back using proceeds from earlier debt sales. In addition, outstanding treasury bills due in 2011 amount to about 42 billion euros, according to data compiled by Bloomberg.
The country relies on non-domestic buyers to purchase about 57 percent of its bonds and more than 81 percent of its treasury bills are held by foreign investors, based on December 2009 holdings published by the Belgian debt agency.
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