Belgian insurer AG Insurance has said it is investing less in Belgian government bonds, given current uncertainty about how the incoming government will address the State's budget deficit.
The group has said that it is moderating its investment in State bonds, as it is awaiting a "credible plan" for reducing the budget deficit before it resumes its normal investment pace.
The Belgian State is in the middle of an excessive deficit procedure launched by the EU regulators in July. Belgium is one of seven EU Member States under fire for overspending, as its annual budget deficit and growing overall debt are beyond acceptable limits set by EU law.
Without a Federal Government, it is unclear how Belgium will meet the impending deadline of 31 December to submit a budget plan to the EU, or which measures the new government will take to address the country's budget deficit.
Wim Vermeir, chief investment officer at AG Insurance, said that the group is "buying slightly fewer Belgian linear bonds (OLO) than usual."
The group traditionally invests a significant portion of its collected insurance premiums in sovereign debt. However, it said it is investing less in Belgian bonds until there is more clarity on the budget strategy of the new Federal Government.
AG Insurance nevertheless maintains long-term confidence in the Belgian economy, where the group keeps nearly one third of its investment portfolio.
"We are just being more cautious for now, and waiting for concrete actions," Vermeir explained.
