The slow-motion crash of Walloon public finances
For years, French-speaking Belgium has watched the slow collapse of its public finances unabashedly. Until now, the mood was relaxed: the European Union, Flanders or the “rich” will pay… That era is coming to an end.
If the TramArdent consortium responsible for the site ensures that the work will continue, the construction site is already two years behind schedule. It looks like the Principality is on its way to another round of endless guts and excavators. The 1980s and their iconic crater on Place Saint-Lambert seem to be making a comeback…
Liège, like Wallonia, almost bankrupt?
Warning signs are piling up. Not because a few prominent university professors have put the situation into perspective, as usual the wall of reality is no longer felt every day.
Last September, a big warning shot was fired. State-owned bank Belfius has signaled its intention to suspend an overdraft loan of around €3 billion to the Walloon Region. manage the running costs of the institution. The Walloon government got a reprieve. But if deficits deepen, costly penalties lurk.
The state of the accounts is enough to scare the most phlegmatic banker.
Note that with constant growth, the debt of the Walloon Region alone may exceed 50 billion euros in 2030, or about 280% of its income… And in the Wallonia-Brussels Federation? Not better. Debt there has doubled since 2014, from 4.1 billion euros to 9.4 billion euros.
The accounting situation is so dire The Court of Auditors refused to approve the 2021 accounts of the Walloon Region and the Walloon-Brussels Federation, in addition to federal government accounts. Extreme anomalies and gray areas.
Namur has now been excluded from Moody’s rating agency’s decision on the evolution of Walloon’s debt rating.
Namur has now been excluded from Moody’s rating agency’s decision on the evolution of Walloon’s debt rating. In the event of a deterioration, the cost of borrowing is likely to rise, further widening the chasm under the Walloons’ feet. A snowball effect is not far off as interest rates rise…
Creditors turn their backs
For many years now, French-speaking Belgium has been unabashedly watching the slow collapse of public finances. So far the mood has always been relaxed: The European Union, Flanders or “The Rich” will pay…
This period is over. Wallonia’s traditional donors are preparing to turn their backs on him.
Although some variation is still possible between socio-occupational categories, the total tax base is maximum. North-South transfers will become rare. The Walloons know that government negotiations in 2024 will cost them dearly. As far as the European Union is concerned, after spending its structural funds on infrastructures that are often so megalomaniac as to be useless – look at the recent cancellation of the expensive Lavoir de Péronnes-Lez-Binche, a paid whim of local elected officials from Binche. Europe – the source dries up sharply. The recovery plan financed by the European Union for Belgium has been cut by 1.4 billion euros. And In Wallonia, some of the promised sums have been re-allocated not to investments, but to plugging budget gaps..
Make or break the economy
We tend to forget this, but the challenge of public debt is not just about the absolute amount of debt. It is also related to the size of the economy to which it belongs. Italy, the sick country of Europe, recorded a positive initial budget surplus. The problem stems mainly from the sluggishness of Italy’s economy, which has seen almost zero growth in two decades and left the debt-to-GDP ratio at barely bearable levels.
The only way to maintain the confidence of its creditors will be to restore the Walloon economy.
Wallonia, regional state spending will soon go to the grinder. Nevertheless, as in Italy, the only way to maintain the confidence of its creditors will be to restore the Walloon economy.
However, we see it every week regardless of the actors involved. mobilization remains very low. We learned that again this week The town of Louvain-la-Neuve, one of the few economic lungs of Wallonia, is empty due to the dictates of UCL., an organization largely funded by the French-speaking Belgian taxpayer, is clearly not accountable to anyone. Despite the huge demand for space in the area, regulations are so strict that companies decide to locate elsewhere…
Positive thinking advocated by Elio Di Rupo, silly video clips of certain sector groups or “checks” for anything or everything do not summarize the concrete performance of the Walloon government in terms of economy today. From the Wallonia trap.
Most public or private decision-makers are primarily concerned with protecting their own privileges and protecting corporate interests.
A collective leap is needed. Unfortunately, the case of the Walloon Parliament, like many others, shows that most public or private decision-makers today are still concerned with protecting their own privileges and protecting corporate interests. . If the Walloon ship sinks, too bad. And with him…
By Jean-Yves Huwartentrepreneur and author.