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Belgium's interim government settles on 2008 budget

Belgium's interim government settles on 2008 budget

Belgium's interim government reached a deal Tuesday on a 2008 budget that will free up euro340 million (US$505 million) for new initiatives, notably higher pensions to offset the pain of inflation that has risen to a 16-year high of 3.5 percent.
The budget deal came a day after political leaders settled on constitutional reforms to defuse a crisis over Flemish demands for more self-rule for the country's Dutch-speaking north. Under the deal, Belgium's French-speaking south will also assume more powers now held by the federal government.
That crisis left Belgium without a government for six months last year and continues to have aftershocks.
The interim government is led by Prime Minister Guy Verhofstadt, who will quit March 20, handing over to a Christian Democratic premier. On Monday the Christian Democrats lost a key ally when a small Flemish nationalist group pulled out of the government because it felt the constitutional reform deal was insufficient.
This means the incoming government of Christian Democrats and Liberals will have to find another Flemish party to sign up.
The budget deal provides for euro340 million in new spending to boost minimum wages, pensions and private sector fiscal relief at a time of fast-rising prices.
It plans to raise extra revenues through a special tax for power companies, the sale of vacant government-owned buildings and by boosting the fight against tax fraud, officials said.
Driven by fast-rising energy and food costs, annual inflation stands at 3.5 percent _ a 16-year record and well above the average of 3.2 percent for the euro zone. Gasoline prices in Belgium hit an all-time high of euro1.50 (US$2.23) a liter last week.
Under Monday's regional autonomy deal, Dutch-speaking Flanders and French-speaking Wallonia will take control of their own economic and industrial policy, as well as housing and agriculture. Those areas have been under federal government oversight.
In the past year, the Belgian debate about more self-rule has triggered questions about whether the country was ready to break apart.
The Flemish Christian Democratic party emerged as the big winner in the June 10 general election. But it has been unable to strike a coalition agreement with French-speaking parties, which initially resisted its plans to devolve more power to the regions. French speakers fear devolution could result in less funding for Wallonia, their poorer southern region, and the bilingual capital, Brussels.


Updated : 2021-06-14 02:01 GMT+08:00