The Brussels-Capital Region risks being mired in enormous debt, according to a study by the University of Namur. If the city doesn’t change its budgetary plans, it will struggle to pay its bills.
The university’s Centre for Research in Regional Economics and Economic Policy (CERPE) has developed a tool to analyse the Brussels-Capital Region’s spending plans, Belgian media outlet Bruzz has reported.
It shows that, although the region’s revenue will rise slightly and expenses are set to drop, this will not be enough to reverse Brussels’ dire financial situation. The regional government has been annually spending between €1 billion and €1.5 billion more than budgeted over recent years.
Even with the slightly better figures the CERPE tool suggests, by 2028 Brussels will still end up with a shortfall of at least €1 billion, on an income of €6 billion, meaning there will be a whopping 16.7 per cent deficit.
A major problem for the region is soaring interest rates. This year, Brussels already has to pay €250 million in interest alone but by 2028 that figure is set climb to €440 million.
The annual deficits, on top of an already existing mountain of debt, mean Brussels is spiralling into a negative cycle of debt accumulation, observers say.
Today its total debt is believed to be around €10 billion. If the government doesn’t drastically change course, Brussels is headed towards a total debt of €17 billion, or 286 per cent of its yearly income. Further ahead, on current estimates, that will hit 300 per cent, meaning Brussels will owe three times what it takes in over a full year.
Such huge debt will mean the next government will be forced to make serious cuts and find new income, according to experts. The most likely candidate to ease that burden lies in the rich North of the country.
In Belgium, the Flanders region is by far the most wealthy and is less prone to spending money in profligate fashion. But given that right-wing parties want more autonomy for the regions, Flanders looks unlikely to provide much support.
The new projections from the Namur establishment give the major opposition party in Brussels, the N-VA, ample means to attack the progressive government there.
Cieltje Van Achter, the group’s leader in the Brussels Parliament, claimed that previously promised budget cuts have not been implemented, as proven by the university study, while debt is exploding.
She described the apparent financial waywardness as an “unbridled spending frenzy”.
