Photo: Unsplash
Belgium must take stronger action to repair its public finances or risk being forced into more drastic measures if financial markets turn against it, according to the International Monetary Fund. In its Article IV assessment released on Tuesday, the Washington-based lender acknowledged limited progress by the government but stressed that the country’s fiscal position remains vulnerable.
Current plans fall short
The IMF said Belgium’s latest fiscal plan is insufficient to halt rising deficits and debt levels. While additional measures included in the 2026 federal budget agreement were described as welcome, they do not deliver the scale of adjustment required to reduce fiscal vulnerabilities. Without further action, the fund warned, debt dynamics could continue to worsen.
Deficits above EU thresholds
Belgium stands out among its peers with one of the euro area’s most challenging fiscal profiles. Budget deficits remain well above the European Union’s 3%-of-GDP ceiling, while public debt is projected to approach nearly 119% of gross domestic product by 2030. These trends leave the country exposed to shifts in market sentiment.
Calm markets mask underlying risks
So far, investor reaction to Belgium’s deteriorating fiscal outlook has been muted. However, the IMF cautioned that such calm should not be taken for granted. International experience shows that confidence can unravel abruptly, leading to rapidly deteriorating debt dynamics and rising borrowing costs.
Call for stronger adjustment
The fund urged Belgian authorities to pursue additional fiscal adjustment efforts to stabilize public borrowing. Acting sooner, rather than under market pressure, would allow for a more orderly and less disruptive correction to the country’s public finances.
As reported by International Investment experts, Belgium’s case illustrates the growing divide in Europe between countries that use periods of market calm to strengthen fiscal resilience and those that risk delay. Without timely reforms, rising debt levels could quickly translate into higher financing costs and reduced economic flexibility.