Net Financing Needs

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In the contribution of Flanders to the Belgian Stability Program, the Flemish Government has committed to the return to a balanced budget in 2017 and to maintain a balanced budget for the coming years. In the table below, there is an overview on the net financing needs of the Flemish Community, in the period 2017-2020.

The initial 2017 budget reached the anticipated budgetary balance for the first time, not taking into account the investment costs for the Oosterweel infrastructure nor the investments in hospital infrastructure that was built before the transfer of this authority in 2016.  In realisations Flanders outperformed this target, and had a surplus of 507 million euro.

With the amended 2018 budget outline, the budgetary balance objective of the Flemish Community  has been confirmed. In realisations Flanders outperformed this target again and had a surplus of 367 million euro.

Apart from the Oosterweel infrastructure and the investments in hospital infrastructure, a correction has been made also for a settlement between the federal government and the Flemish Community that rectifies the surplus that was transferred by the federal government over the last three years relating to the Sixth State Reform. A fourth correction concerns the takeover of debt of Flemish municipalities by the Flemish Community of municipalities that voluntarily merge together. Since this improves the net financing needs of the Flemish communities, it is neutral for Flanders as a whole.

As in 2017 and 2018, the budget will be structurally balanced in 2019 with even a surplus in realisation of 238 million euro. 2020, on the other hand, will be a more difficult year for the budget with an estimated deficit of 431 million euro in the initial budget. In the budget adjustment the deficit increased to 957.6 million euro.

Due to COVID-19 the budget will be impacted. The coronavirus will have an effect on the revenues (727 million) and there were also taken one-off expenditures measures for 2,468 million euro. All these one-off effects will increase the budget deficit to 4.2 billion euro (subject to approval by Parliament).

Furthermore the 2020 SFA grants could also be impacted as a result of the worse economic figures. Based on the latest predictions of the Federal Planning Bureau of June 2020, this could lower the SFA grants by 2.1 billion euro. Normally this adjustment is lagged by one year but there is a possibility that the federal government will already make the adjustment this year. With this adjustment the budget deficit will further rise to 6.3 billion euro in 2020. This effect is not included in the table below.

 


Net Financing Needs 2017-2020 (in million euro)

 

2017

2018

2019

BR 2020

Financing needs (1)

581

-744

305

-4,254

Oosterweel (2)

34

11

67

102

Hospital infrastructure before 2016 (3)

40

0

 

 

Takeover debt communities (4)

 

95

 

 

One-off settlement relating to State Reform (5)

 

1,005

 

 

Financing needs after corrections regarding budgetary balance objective (6=1+2+3+4+5)

507

367

238

-4,152