OECD asks Belgium to find another 3.5 percent of GDP on top of the planned effort

The Organisation for Economic Co-operation and Development (OECD) published its country survey of Belgium on Tuesday, and it lands in the middle of the crisis over the federal budget. The savings of 1.5 percent of GDP planned by 2029 are not enough to keep public debt under control, according to the OECD, Business AM reports, citing Belga. To stabilise the debt at around 110 percent of GDP, additional measures worth 3.5 percent of GDP are needed by 2035, and that effort should come as early as possible, writes Briefs Finance.

The OECD puts the debt for 2025 at 108 percent of GDP and the deficit at 5.2 percent. According to Briefs Finance, that puts Belgium on course for the largest deficit in the euro area. The organisation advises against general tax increases, as the tax burden is already among the highest in the developed world. It does call for scrapping tax exemptions, shifting the burden away from labour, possibly higher levies on property and the environment, and fairer taxation of capital and wealth.

The OECD also calls for lower public spending and reforms in education, healthcare and social security. It proposes linking the retirement age to life expectancy, putting more emphasis on preventive care, making wage setting more flexible and reducing red tape for businesses, according to Business AM. The advice comes a few days after the five governing parties failed to agree on a package of around 10 billion euros and Prime Minister Bart De Wever offered his resignation. The spread of Belgian ten-year bonds over German ones rose above one percentage point in the process, Briefs Finance reported earlier, citing Bloomberg.