The European Commission has provisionally approved Belgium’s first request for payments from the European Recovery Fund, the Commission announced on Tuesday. However, part of the payment is to be suspended due to insufficient pension reforms.
Belgium had submitted a request for €974 million in September last year. After deducting the pre-financing it has already obtained, the amount it is still to receive is €658 million.
To claim the funds, Belgium needed to achieve 20 milestones and targets, but the Commission feels this has not been fully accomplished. It is particularly dissatisfied with the reform intended to improve the financial sustainability of the pension system.
About €31 million to be withheld
As a result, the Commission intends to suspend part of the payment. While it has not specified the exact amount, Thomas Dermine, the outgoing State Secretary for Recovery and Strategic Investments, has indicated that €31 million will be withheld.
Belgium now has one month to provide its comments, followed by six months to meet the Commission’s requirements and obtain the release of the remaining funds.
Outgoing Minister of Pensions Karine Lalieux maintains that, based on figures from the Federal Planning Bureau, the government has demonstrated that the reform improves the financial sustainability of the pension system.
Positive assessment of 19 milestones and targets
“The government has clearly chosen a feasible and positive reform for workers and pensioners,” she said. Lalieux also highlighted the Commission’s positive view of the social dimension, including increased minimum pensions.
However, the Planning Bureau clarified that it never fully calculated the entire pension reform. “We only analysed separate measures and scenarios for the minister and the government,” it noted. “Moreover, the Planning Bureau never stated that the overall pension measures taken during this legislative period are budget-neutral or saving.”
The other 19 milestones and targets received a positive assessment. These include supporting the transition to electric vehicles through initiatives such as the rollout of charging stations and the reform of tax benefits for company cars.
The Commission is also pleased with progress in rolling out 5G and fibre-optic networks and the reform of Wallonia’s programme for getting job seekers back to work.
Belgium has met 87% of targets due next year - Minister
Dermine expressed satisfaction with the analysis. “As promised, Belgium is honouring its commitments under the recovery plan and will receive almost all the expected funds,” he said in response to the provisional approval from the Commission, which still needs confirmation from the Economic and Financial Committee.
This committee, comprising experts from the Member States, has four weeks to provide an opinion.
Meanwhile, projects implemented under the plan are fully underway. According to Dermine, 87% of the targets due next year were met or being achieved at the last progress report in April. This includes the renovation of more than 145,000 homes and the installation of 32,000 charging points. Dermine plans to submit a second payment request for a total of €1 billion on 19 July.
The European Recovery Fund (officially the Recovery and Resilience Facility) consists of €650 billion in grants and loans to help Member States recover economically from the pandemic.
France has received almost 80% of its recovery funds
Belgium is entitled to about €5.3 billion: over €5 billion in grants and €264 million in loans. This support will be spread over 119 investment projects and 40 reforms, mainly focused on climate targets and digitalisation.
Belgium has already received approximately €915 million in pre-financing.
The country’s recovery plan was approved in Summer 2021, but following the pre-financing, further payments were awaited.
Member states such as Italy and Croatia have already received four payments. France is the farthest ahead in terms of fund absorption, having received nearly 80% of its allocation.
A total of €240 billion has been disbursed to all Member States combined. The last payment requests must be submitted by August 2026.
