(1)

According to Article 126 of the Treaty on the Functioning of the European Union (TFEU), Member States are to avoid excessive government deficits.

(2)

The Stability and Growth Pact is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth conducive to employment creation. The Stability and Growth Pact includes Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation of the excessive deficit procedure (1), which was adopted in order to further the prompt correction of excessive general government deficits.

(3)

The Council, acting on a recommendation by the Commission, decided, on 2 December 2009, in accordance with Article 126(6) TFEU, that an excessive deficit existed in Belgium (2). On the same day, and also on the basis of a recommendation by the Commission, the Council adopted a Recommendation under Article 126(7) TFEU ("Council Recommendation of 2 December 2009") requesting the Belgian authorities to take action in a medium-term framework in order to bring the deficit below 3 % of GDP by 2012.

(4)

Specifically, in order to bring the general government deficit below 3 % of GDP in a credible and sustainable manner, the Belgian authorities were recommended to (a) implement the deficit-reducing measures in 2010 as planned in the draft budget for 2010 and strengthen the planned fiscal effort in 2011 and 2012; (b) ensure an average annual fiscal effort of ¾ % of GDP over the period 2010-2012, which was also to contribute to bringing the gross debt ratio back on a declining path that approaches the reference value at a satisfactory pace by restoring an adequate level of the primary surplus; (c) specify the measures that are necessary to achieve the correction of the excessive deficit by 2012, cyclical conditions permitting, and to accelerate the reduction of the deficit if economic or budgetary conditions turned out better than expected at the time the excessive deficit procedure (EDP) recommendations were issued; and (d) strengthen the monitoring mechanisms to ensure that fiscal targets are respected. In its recommendations, the Council established a deadline of 2 June 2010 for effective action to be taken in line with the provisions of Article 3(4) of Regulation (EC) No 1467/97.

(5)

The Commission services 2009 autumn forecast, which was underlying the Council Recommendation of 2 December 2009, projected that the Belgian economy would expand by 0,6 % in 2010 and 1,5 % in 2011. The year 2012 was beyond that forecast's horizon, but under the hypothesis of a gradual closure of the large negative output gap by 2015, higher growth than in 2011 was expected for 2012. GDP growth in 2010 was substantially above that expected in that forecast; in 2011 it was slightly above the projected 1,5 %, while in 2012 the Belgian economy went through a contraction of 0,2 %.

(6)

On 15 June 2010, the Commission concluded that, based on the Commission services 2010 spring forecast, Belgium had taken effective action in compliance with the Council Recommendation of 2 December 2009 to bring its government deficit below the 3 % of GDP reference value and considered that no additional step in the EDP was therefore necessary at that point in time.

(7)

Based on the Commission services 2011 autumn forecast, there was clear evidence of compliance risks with the Council Recommendation of 2 December 2009, given the still significant excess over the 3 %-of-GDP deficit threshold close to the deadline in the absence of a 2012 budget and the fact that the fiscal effort achieved until then fell short of the recommended one. Therefore, the Commission expressed its concerns and urged Belgium to take the necessary measures in time to avoid a stepping up of its EDP. In December 2011, the newly constituted Belgian government agreed on a draft budget. On 11 January 2012 the Commission concluded that, based on the macroeconomic scenario prevailing at that moment (a growth projection of 0,9 % according to the Commission services 2011 autumn forecast), the consolidation measures in the budget and the additional freeze, the deficit would reach 2,9 % of GDP in 2012. Hence the Commission considered that no further steps in the EDP concerning Belgium were needed at that point in time.

(8)

A new assessment of the action taken by Belgium to correct the excessive deficit by 2012 in response to the Council Recommendation of 2 December 2009, leads to the following conclusions:

(9)

Belgium took some measures to strengthen the monitoring mechanisms to ensure that fiscal targets are respected, such as the establishment of a monitoring committee in 2010 and a strengthened monitoring of the budget execution in 2012. However, no significant progress has been made to adjust the fiscal framework in order to ensure that the budgetary targets are binding at federal and sub-federal levels, and increase transparency of burden-sharing and accountability across government layers.

(10)

This leads to the conclusion that the response of Belgium to the Council Recommendation of 2 December 2009 has been insufficient. Belgium did not put an end to its excessive deficit by 2012. The fiscal effort falls significantly short of what was recommended by the Council, and was even entirely absent in 2011,