Council Opinion of 28 February 2000 on the updated stability programme of Belgium for the period 2000 to 2003
6. 4. 2000 EN Official Journal of the European Communities C 98/3 mination the medium-term structural challenges to public finances from pension and other age-related budgetary expen- ditures. Recent the government proposals expansion of funded pension provisions go in the right direction but would not eliminate the need to reexamine the parameters of the present system. A timely reassessment of the parameters of the pension system would allow the expected to promote to increase in the ratio of pension expenditures to GDP to be the contained. The Council Italian further government privatisation programme and to enhance the structural reforms of labour and product markets and of the public administration, which are all needed in order to foster competition and efficiency and revitalise the Italian economy. encourages its pursue with vigour COUNCIL OPINION of 28 February 2000 on the updated stability programme of Belgium for the period 2000 to 2003 (2000/C 98/03) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(3) thereof, Having regard to the recommendation of the Commission, After consulting the Economic and Financial Committee, HAS DELIVERED THIS OPINION: On 28 February 2000 the Council examined the 1999 update of the stability programme of Belgium which covers the period 2000 to 2003. The Council notes with satisfaction that the general government deficit for 1998 was substantially lower than that estimated in the initial stability programme and that budgetary adjustment continued in 1999 despite a slowdown in economic activity and extra expenditure related to unforeseen events; the debt ratio was reduced by 6,3 percentage points during the last two years to an estimated 114,9 % of gross domestic product (GDP) at the end of 1999. is that The Council consistent with the Broad Economic Policy Guidelines. the updated programme considers The budgetary projections of the updated stability programme are based on a prudent macroeconomic scenario assuming real GDP growth of 2,5 % per year for 2000 and 2001 and a trend GDP growth rate of 2,3 % for the following years. The Council considers that the updated the GDP growth projections of programme are likely to correspond to the lower limit of a range of probable macroeconomic projections; as a conse- in the event of stronger quence, growth, the budgetary outcomes will be better than projected in the updated programme, particularly in 2000. the Council expects that, The Council notes the intention of the Belgian government to the target of advance, compared to the initial programme, balanced government accounts to 2002, and to achieve a budget surplus in 2003; it commends the commitment of the Belgian authorities to seek better budgetary results in 2000 than those projected in the updated programme; such a development would facilitate achieving a debt ratio close to 100 % of GDP in 2003, as projected in the programme. The Council considers that the underlying budgetary position of the general government since 1999 provides a safety margin against breaching the 3 % of GDP deficit threshold in normal circumstances, thus fulfilling the Stability and Growth Pact requirements; however, the Council takes the view that the improvement of in the programme is necessary in order to allow a steady decline of the still high debt ratio and to create room for the announced reform of income taxation. fiscal position envisaged the The Council welcomes the renewed commitment in the 1999 update to maintain high primary surpluses as a central element of the fiscal consolidation strategy in Belgium; this strategy has proved its crucial role in advancing budgetary adjustments in in consolidating the recent past and is considered essential progress made continued in this the debt ratio. The Council considers that a reduction of in real growth in primary expenditure of 1,5 % per year, targeted terms, primary surplus and encourages the Belgian Government to implement it with rigour. and ensuring a is appropriate to achieve in order area the is increase that a key objective of the updated The Council notes in the to achieve a substantial programme employment rate in Belgium and to enhance economic effi- ciency by means of a package of reforms and policy measures; in this context, the Council welcomes the decision of the government to strengthen the effort towards reducing overall tax burden, in particular on labour. In the vein of its opinion on the initial stability programme (2), the Council encourages the Belgian Government, within the expenditure limits fixed by the programme, to give priority to government and the to improve investment productive potential of the economy; it invites the government to provide, its stability programme, projections on main categories of government expenditure, notably government investment. in future updates of infrastructure in order The Council welcomes the cooperation agreement under which budgetary objectives, within a medium-term time horizon, will be fixed for all in Belgium as an levels of government important element enhancing transparency and credibility of the updated stability programme. (1) OJ L 209, 2. 8. 1997, p. 1. (2) OJ C 124, 5. 5. 1999, p. 4