Credit rating agency S&P has maintained Belgium's credit rating at AA-with a stable outlook, but warned that spikes in energy prices could trigger a downgrade.
The agency noted that the Belgian economy is robust, prosperous, and diversified, but vulnerable to energy-price shocks.
S&P points to high government debt and the difficult savings exercise ahead, and at 5.3%, Belgium currently has the eurozone's worst budget deficit as a share of GDP. The agency therefore warns it could downgrade the rating if government deficits are larger than expected or if the energy shock has a greater impact than anticipated.
Conversely, Belgium's credit rating could be upgraded if budget deficits fall sustainably and government debt shrinks. The De Wever government is currently in difficult negotiations over budget cuts totalling more than €10 billion over the coming years.
Negotiations between the government parties are due to resume this week after the Flemish socialists rejected proposals last week. The proposals included increasing out-of-pocket contributions for GP consultations from €4 to €10 and saving €750 million by encouraging a faster return to work for those on long-term sick leave.
The government has also abandoned an across-the-board VAT increase after resistance from some parties. Instead, targeted increases have been put forward for negotiation on items such as firewood, hotel stays and concert tickets.
The government also wants to raise €1 billion from the wealthiest taxpayers. About half would come from changing the rules around the use of management companies, which some highly paid workers use to reduce their tax bills.
