At Fitch, Belgium is no longer in the running
But also - TikTok ban, House of Representatives condemns Holodomor
Hello, it's 13 March and here's what you need to know about important Belgian political issues. Belgium Matters, your weekly breadcrumb trail through the Belgian federal maze. Follow the news about Belgium within its borders and in the world!
RETURN TO...
ECONOMY Fitch threatens to unseat Belgium
Background The rating agency Fitch Ratings is concerned about Belgium's public finances due to pension costs and automatic wage indexation, reports L'Écho. Although the rating is maintained at AA-, the agency underlines the persistence of large budget deficits. According to the agency, the seven-party coalition in the executive remains fragile and the agency considers it unlikely that consolidation measures will be adopted before the 2024 federal election. The rising cost of debt and the long maturity of Belgian debt are also factors of concern.
Fitch Ratings Fitch Ratings is a provider of credit ratings, commentary and economic research that aims to provide clarity to enable clients and businesses around the world to make better decisions. Their goal is to provide insight into an industry, its impact on the economy, businesses and resources on a global scale, with experts providing ongoing analysis and commentary.
Factors In a commentary on the Belgian rating published on 10 March, Fitch states that the main factors for this revision are as follows:
The Belgian budget deficit is expected to widen to 5.2% in 2023 from 4.0% in 2022.
The debt-to-GDP ratio is expected to reach 107.0% of GDP in 2024 and to rise further to 110.2% by 2027.
The interest payments/income ratio is projected to increase to 3.4% by 2024.
Limited capacity to cope with pressures due to the government's difficulty in improving the long-term sustainability of public finances.
The Belgian economy is likely to slow down and core inflation continues to rise.
There are risks to competitiveness due to automatic wage indexation.
However, Belgium's credit profile is still supported by its diversified, high value-added and prosperous economy, favourable governance indicators and the reserve currency status of the euro.
Reactions Alexia Bertrand, Belgian Secretary of State for the Budget, acknowledged Fitch's warning about the country's high deficit and the need for reforms, saying that "this warning was foreseeable" and that the government takes it seriously. Bertrand also highlighted the government's efforts to deal with budgetary control and rising pension costs. This is the first time in three years that Fitch has revised its outlook for Belgium. In April 2020, Fitch had lowered the country's outlook to negative due to the consequences of the COVID-19 pandemic, but it was later raised to stable in September 2021 due to a more favourable economic outlook.
According to Eric Dor, director at the IESEG School of Management, Belgium must act to solve its budget deficit, reports L'Echo. He says that Belgium is "the worst performer in the EU" and "almost the only country with a primary deficit above the amount that still allows the debt to be stabilised as a percentage of GDP". Dor believes that the country's budgetary situation is "worrying" and that action is needed, either by increasing revenues or by reducing expenditure. The IMF and the European Commission have also warned Belgium of its deteriorating budgetary situation. Political stalemate in a ragtag federal coalition has prevented any progress and the country's public debt is expected to rise.
SECURITY
Belgium side TikTok app has been banned from the work devices of Belgian government officials, after the country's intelligence agency warned that the app could pose a threat to cyber security, according to L'Echo. The National Security Council implemented the ban for a period of six months.
Risks associated with TikTok include concerns about espionage due to the app's ownership by a Chinese company, the opaque nature of the recommendation algorithm which could influence opinions, and the potential for data breaches due to the app's large number of access requests. In addition, there is a risk of data transfer from personal to work devices, highlighting the need for employees to be vigilant about cyber security.
European side The European Commission has also asked its employees to uninstall TikTok from their work and personal devices using work apps due to concerns about the app's data protection, according to EURACTIV. The request was communicated by email and employees were asked to comply by 15 March. Failure to comply would result in business applications such as the Commission's email and Skype for Business being unavailable. TikTok responded by saying that the decision was wrong and that they protect their users' data. Last November, TikTok had admitted that personal data of users from all over the world could be accessed at the Chinese headquarters.
...BUT ALSO
House of Representatives condemns Holodomor The House has recognised the Holodomor, the 1932-1933 famine in Ukraine caused by the Stalinist regime, as genocide, reports RTBF. The resolution was approved unanimously, except for the abstention of the PTB. Ukraine has been campaigning for years for the Holodomor to be recognised as genocide. The resolution also condemns the manipulation of historical memory by the Russian regime and commemorates the victims of the famine. Several European parliaments and the European Parliament have also recognised the Holodomor as genocide.
Agreement on migration policy The Belgian government has agreed a series of measures to tackle migration and asylum policy, including the creation of 2,000 extra places for asylum seekers, reports L'Echo. The government aims to set aside accommodation for migrants who are in the process of seeking asylum, combat abuse in family reunification cases and improve protection for vulnerable people. The new measures also include speeding up the return of people not eligible for asylum and creating a new right of residence for stateless people and parents of refugee children. Despite these measures, criticism persists regarding the lack of clear deadlines and the continued high number of arrivals in Belgium.
Health Data Agency The House has approved a bill establishing a Health Data Agency, reports VRT. The Agency will ensure better availability of health data, facilitate access to it in a reliable and simplified way, and support scientific research and the development of quality health care policies. The Agency will be based on principles of open communication, participation, transparency and cooperation with existing national and international initiatives. Concerns about privacy were expressed, but the Minister of Health assured that the Agency will be empowered in accordance with EU regulations.
Belgium-Russia trade According to statistics from the Belgian Foreign Trade Agency (BFTA), despite international sanctions against Russian companies, trade between Belgium and Russia has not decreased a year after Russia invaded Ukraine, according to The Brussels Times. The Foreign Trade Agency is a public institution that acts as a platform for collaboration between the federal authority and the regions to promote exports and foreign trade, with a board of directors whose honorary president is the king. Belgian companies exported goods worth €3.6 billion to Russia, while imports from Russia reached €12.8 billion in 2022. The value of goods imported from Russia rose by a record 64.7% due to a rise in gas prices, but even excluding this rise in energy prices, imports from Russia remained at a high level. Several sectors had a good year in terms of trade with Russia, notably exports related to the biochemical sector, which increased by 22% last year.