Brussels (The Brussels Morning Newspaper):While Fitch maintains Belgium’s AA- credit rating it cautions against growing government debt and rising political challenges in making cuts plus possible labor cost challenges which can reduce competitiveness as well as a country’s growth.
With a good economy and strong banks according to Fitch but due to large debt which keeps growing there are fears for Belgium’s future. It was also noted that complicated Belgian politics may hinder future spending cuts.
What challenges does Belgium’s economy face amid rising debt?
Fitchs assessment of Belgiums economic fundamentals is that its economy generally Prosperous and continued to nudge on track inclusive in part by a robust national banking sector. The little bomb waiting to go off is this alert about Belgiums towering government debt which is said to be very high and rising. It raises fears about whether the countrys fiscal picture is sustainable. This growing financial burden will pose a huge challenge to Belgium and could indeed affect its credit rating in the future. Fitchs clear understanding of Belgiums complex political and institutional context indicates the challenges facing it in carrying out any effective austerity program. When successive governments come and go Belgiums complex political landscape developed over the past three decades makes it hard for central government to pare back spending to levels necessary dealing with soaring debts Obstacles and many others confront it at every turn. A negative outlook that Fitch reveals flags up the uncertainty occurring Frances ability to maintain long term budgetary discipline. In throwing into sharp relief potential hazards for a situation where all sorts of means are resorted to to meet rising indebtedness and at the same time live with the complex political structure within which they have to exist doesn’t mount up-checks is kept on its future trends.
Fitch also noted that though the formation of the new government in Belgium is proceeding more rapidly than it did before. It is going against many obstacles which might endanger its ultimate salvation. If Belgium fails to find a good way out of its financial difficulties Fitch said it could cut the countrys rating. They also pointed out that if wages go up companies in Belgium will find profitability a struggle which means that the countrys growth could be kept down and its credit rating damaged. The appraisals bestowed on different countries by big credit rating firms like Fitch are precious to the nerve. That is why when the rating goes down its not good news for governments because more difficult credit conditions may easily be returned in renminbi. It also reduces a dollar s purchasing power and leads us toward unstabilised prices and development unlike each other.
