Brussels (Brussels Morning Newspaper) – Fitch downgraded Flanders’ credit rating from A to A-, partly due to Belgium’s weaker finances. Minister Ben Weyts says Flanders is unfairly penalised despite aiming for a balanced 2027 budget.
AS VRT News reported, Fitch, a credit rating company, has lowered Flanders’ credit rating from ‘A’ to ‘A-‘. They think Flanders might have more trouble paying back its debts. This change comes after Fitch also lowered Belgium‘s credit rating.
They mentioned that Flanders used to have a better rating than Belgium, showing it was financially strong. Fitch is now worried about Flanders’ finances, like its debt and spending. Even with the lower rating, Flanders is still considered a good borrower, but it might cost them more to borrow money now.
What led Fitch to downgrade Flanders despite strong finances?
Even though Flanders’ rating went down, Fitch still thinks it has a lot of control over its money. Officials mentioned that Flanders can collect its taxes and make its budgets. This is why its rating is still better than Belgium’s.
They said that the lower rating isn’t a huge problem, but it means Flanders needs to be careful with its money. It might make Flanders change how it spends and manages debt. Investors still see Flanders as doing well, but Fitch wants them to plan carefully, especially with money problems in Europe.
Fitch’s decision to lower Flanders’ credit rating from A to A- wasn’t just about how Flanders is doing financially. It was also about how Flanders is linked to Belgium’s finances. Fitch stated that the gap between Flanders’ rating and the rating of the Belgian government was too large. Although Flanders has a considerable degree of financial independence, it is inevitably connected to the overall financial health of Belgium.
Fich mentioned that if Belgium’s finances get worse or even default, it could cause problems for Flanders. This could mean higher borrowing costs and less confidence from investors. Fitch believes that Flanders shouldn’t have a rating that’s much better than Belgium’s, particularly since Belgium’s financial situation has declined.
Flemish Budget Minister Ben Weyts is not happy about the downgrade. He says it doesn’t show how well Flanders is doing financially. Flanders is on track to balance its budget by 2027, and its economy is strong. Weyts believes Flanders would have kept its A rating if it were judged on its own. He thinks Flanders is being punished because the federal government isn’t managing money well.
Weyts said it’s a shame that Flanders is paying for the whole country, even though it’s being careful with its finances. He mentioned that this shows the disagreements between the regions and the federal government in Belgium. It also shows that credit rating agencies sometimes care more about the overall risk of the system than how well each region is doing on its own.
