US ratings agency Standard & Poor’s (S&P) has downgraded Belgium’s credit outlook from stable to negative, citing concerns over the country’s rising budget deficit. This is a warning to the federal government to implement its austerity measures, the Belgian debt agency said on Saturday.
In a report published late on Friday, S&P praised the recent budget agreement reached by the government of Belgian prime minister Bart De Wever, saying it “brings policy clarity and signals a shift toward fiscal prudence”.
However, the US rating agency sees hurdles to the implementation of these plans. It has therefore changed its outlook on Belgium’s creditworthiness from stable to negative.
Social and trade tensions
Potential pitfalls include “possible social backlash”, such as the upcoming general strike on Tuesday. In addition, “current global trade tensions” – referring to US president Donald Trump’s tariffs – could affect Belgium’s economic growth, S&P warns.
The agency did not touch Belgium’s rating, which remained unchanged at ‘AA/A-1+’, third best after ‘AAA’ and ‘AA+’. This means that S&P considers Belgium to be in a good position to meet its financial obligations.
The ratings assigned by international rating agencies help determine the extent to which a country can easily borrow money on the international markets. S&P follows fellow rating agency Moody’s, which lowered its outlook for Belgium to negative in October last year.
A warning to the government
The change is a warning to the Belgian government to implement its austerity plans and continue with its planned investments, said Jean Deboutte, director of the Belgian Debt Agency, on Saturday.
“The rating agency’s comments are based on doubts that the government’s plans will succeed,” Deboutte said. “But if the plans are implemented, this should not lead to a rating downgrade.”
“If the plans are implemented, this should not lead to a rating downgrade”
In mid-June, credit rating agency Fitch will publish a new rating. S&P’s next rating is due in October, and Moody’s will publish theirs around the same time.
