Belgian public finances are causing Moody’s concern. The American rating agency kept its credit score for Belgium unchanged at ‘Aa3’ on Friday, but lowered the outlook.
‘Aa’ means that Moody’s estimates the credit risk as “very low”. It is the second best score. The ‘3’ does mean that Belgium is at the bottom of that rating category. This high score therefore remains unchanged for Belgium. Moody’s points to the “diversified, prosperous and innovative” economy, where our country can benefit from “its geographical location in the heart of Western Europe”. “Belgium has shown better than expected resistance to economic shocks,” it says, among other things. Moody’s mentions the energy crisis and high inflation, which are all well digested here.
However, the rating agency is also concerned about public finances and a lack of decisive reforms. It points to, among other things, the high debt burden and rising aging costs.
That is why Moody’s lowers the outlook for Belgium from ‘stable’ to ‘negative’. “Without a large-scale fiscal consolidation program (read: austerity and tax reforms), debt will continue to rise,” emphasizes the credit rating agency, which also recognizes that such a program is “challenging”. Moreover, efforts are needed both federally and at the level of the regions and communities, “while Belgium lacks a coordination mechanism to achieve this”.
The ratings assigned by international credit rating agencies help determine the extent to which a country can easily borrow money on the international markets.