Minister of Budget Sophie Wilmès addressed AmCham Belgium members at our traditional New Year Reception on January 18, held in the lovely Tapestry room at BNP Paribas Fortis’ rue Royale premises. More than 140 guests attended, including a number of representatives from the federal and regional governments, parliaments and administrations.
Luc Dhont, Chair of the Legal & Taxation Committee, introduced Minister Wilmès, who recently took office. Before joining the Michel Government in September 2015, she was a Member of the Chamber of Representatives, and has served as alderwoman tasked with finances in Rhode-Saint-Genèse for eight years.
In her keynote speech, entitled ‘Governmental ambitions and budgetary constraints,’ Minister Wilmès stressed the importance of international organizations such as AmCham Belgium for the Belgian Government and of US companies for the country. Not only are US companies vital in terms of R&D and investment, but they also have a significant impact through their social projects (see our latest report, The Importance of US Companies in Belgium: Community Impact).
According to Wilmès, the government has set itself two essential tasks: first, to reinforce the Belgian economy, and second, to balance public finances by reducing public expenditure. Looking back at the past 15 months, Wilmès highlighted some of the important measures taken by the Michel Government, such as pension reform, the index jump and the tax shift. Independent studies by the National Bank of Belgium and the Federal Planning Bureau on the expected returns of the tax shift both point to a positive effect.
Wilmès explained the budgetary framework for the coming years and spoke about Belgium’s relations with the European Commission. As an EU Member State, Belgium is accountable to the European institutions when it comes to its budget. While last year Belgium’s budget was evaluated as ‘at risk of non-compliance,’ Wilmès said, “In November 2015, the European Commission reports evaluated Belgium’s draft budgetary plan for 2016 as ‘broadly compliant.’ This indicates that we are clearly on the right path.”
The government plans to reduce the structural deficit annually by 0.6% of GDP between 2015 and 2017 and will also reduce the debt level this year to 107% of GDP. As Wilmès said, “This is not only a European requirement, but is also important to be better able to face any potential new economic shock.”
The past year has also seen an unprecedented migration crisis and the terrorist attacks in Paris which will also have an important and probably lasting impact on the budget. The extra resources necessary to tackle the migration crisis are estimated at €350 million. The European Commission is willing to consider the spending resulting from the exceptional inflow of refugees as an unusual event, outside the control of the government. Wilmès hopes that the Commission will do so as well for the fight against terror and radicalism, for which an extra €400 million are budgeted. This is important, as the European Commission evaluates a country’s budget in function of its structural deficit. By considering these costs as exceptional, it would allow more flexibility within the budget and help achieve the expected yearly structural improvement.
Finally, it is the government’s desire to kickstart the economy while ensuring healthier public finances and to embark on reforms needed to maintain Belgium’s high-quality social security system. Wilmès concluded, “We strongly believe that the economic development is working for our social security system, and not against, that only jobs and economic wealth can provide protection for the people who need it.” As this can only be done by creating “jobs, jobs, and more jobs,” Wilmès trusts that “companies will be real partners in this challenge.”