Brussels (Brussels Morning) – Wallonia’s debt is projected to increase by €10 billion by 2029, resulting in €982 million in annual interest payments, according to University of Namur research.
How much will Wallonia’s debt increase by 2029?
Wallonia’s debt is cast to surge by €10 billion between 2024 and 2029, commanding the region €982 million in interest payments by 2029, according to a report by L’Echo, based on research by the University of Namur’s Regional Economics and Economic Policy Centre (Cerpe). The researchers expect that Wallonia’s debt will grow from €28.3 billion in 2024 to €38.7 billion in 2029. Similarly, interest charges are anticipated to increase significantly.
What are the projected interest payments on Wallonia’s debt?
By the close of 2024, Wallonia will have disbursed €522 million paying interest on its debt. However, by 2029, this figure is cast to shoot up to €982 million, representing about 6% of its estimated receipts of €17.5 billion that year. This debt trek has an impact on another critical variable: the debt-to-revenue ratio. Cerpe’s projections reveal that this ratio will reach 220% by 2029. According to the office of Wallonia’s outgoing Budget Minister, Adrien Dolimont, “debt
sustainability is described as being below a debt-to-revenue ratio of 180%.”
How has Wallonia’s debt-to-revenue ratio changed over time?
Moreover, in April 2023 it came to light that Wallonia’s government finances are evolving increasingly unsustainable, with the public debt of Belgium’s French-speaking area set to double by next year corresponding to 2019, l’Echo reported. According to figures shown by Les Engagés – a centrist opposition party in the Walloon Parliament – the region’s debt is on its way to hitting €43 billion in 2024, almost double the €23 billion of 2019.
The forecast came at a time when numerous economists and investors had voiced deep concerns about the general fitness of Belgium’s public finances. Belgium’s federal debt-to-GDP ratio and budget deficit were amongst the most elevated in the EU, leading the EU and the IMF to denounce the country’s fiscal profligacy.
What factors have contributed to Wallonia’s rising debt?
At then, the Walloon Government claimed that its swelling debt was the result of a series of unprecedented problems over the past few years, including the torrents in 2021, the COVID-19 pandemic, and skyrocketing energy costs catalysed by Russia’s invasion of Ukraine last year.
Les Engagés in the Walloon Parliament François Desquesnes said: “These crises have burdened the budget by €4.7 billion,” he told l’Echo. “Of the remaining €15 billion, €6 billion have been spent on the [Covid-19] stimulus plan and €9 billion are simply baffling.”
Worries about Wallonia’s public finances will likely be compounded over the forthcoming months, as the European Central Bank persists in hiking interest rates in its efforts to curb runaway inflation across the eurozone.
How might Wallonia address its financial challenges?
According to Les Engagés MP André Antoine, the current condition of Wallonia’s finances means that without firm and immediate action, deep cuts to the region’s public spending will be required – prospects that will only worsen the situation for many of the region’s residents who are already labouring with a profound cost of living crisis. “Without putting the Walloon finances in order, there is a risk of mourning a period of austerity during the next parliament,” Antoine stated.
