The Federal Government unexpectedly made a profit of €150 million by issuing "special" one-year state bond in September 2023, according to the Belgian Debt Agency.
When explaining the management of the government debt to the House Finance Committee on Tuesday afternoon, the directors at the Debt Agency called issuing the one-year state bond "the event of the year."
"Someone signed up for the bonds every three seconds," directors Marius Post and Jean Deboutte told the Committee.
The one-year, tax-friendly state bond was issued at the initiative of Federal Finance Minister Vincent Van Peteghem (CD&V), partly with the aim of encouraging banks to increase the interest on their savings accounts.
The normal withholding tax of 30% on a state bond was reduced to 15% to compete with banks' savings accounts and entice Belgians to sign up for the bonds, but its success exceeded all expectations: the Debt Agency raised €21.89 billion in September – more than it needed to refinance the Belgian debt.
Therefore, part of the money was reinvested, even at a slightly higher interest rate than what the Agency paid to Belgian investors. According to the Agency, the budget made a 'profit' of €150 million on the state bonds.
The Debt Agency also had to pay fewer commissions to the banks, because investors signed up for much more money than expected directly, instead of through the banks. These predicted commission payments were included in the interest that the Agency offered on the state bond.
Additionally, a lot of money flowed from savings accounts – on which de facto no withholding tax is usually paid – to the state bond, on which a 15% withholding tax was due.
