Belgium Finalizes Federal Budget Deal Targeting €8.1 Billion Deficit Reduction by 2029

Federal Government Confirms Budgetary Path

Belgium's federal government has formally adopted a multi-year budget deal, with projections indicating a reduction in the federal deficit by **8.1 billion euros** by **2029**. Budget Minister **Vincent Van Peteghem** (CD&V) presented the draft budget for **2026** on **Tuesday, February 3, 2026**, outlining the measures intended to stabilize the nation's public finances.

The agreement, initially reached after extensive negotiations on **Monday, November 24, 2025**, by the government led by Prime Minister **Bart De Wever** (N-VA), was first estimated to achieve a **9.2 billion euro** reduction. However, a revised projection, presented by Van Peteghem, adjusted this figure to **8.1 billion euros**. This revision is attributed to a technical correction related to ammunition purchases and an offsetting adjustment for measures within the Defence Plan. The measures are expected to contribute a **2.7 billion euro** reduction to the budget deficit in **2026** alone.

Addressing Fiscal Pressures and EU Requirements

The budget deal comes as Belgium faces significant fiscal challenges. The country's budget deficit was projected to reach **5.3% of Gross Domestic Product (GDP)** in **2025**, with forecasts suggesting a potential rise to **5.9% by 2027** if no corrective actions were taken. Belgium is currently subject to the European excessive deficit procedure, which mandates a reduction of the deficit to below **3%** by the end of the legislative term in **2029**.

Despite the newly announced measures, the deficit is still anticipated to be around **4.3% of GDP by 2029**. The European Union's assessment of Belgium's overall budget deficit across all levels of government projects it to be **4.9% of GDP in 2026**, with a debt ratio of **110.1%**.

Key Measures and Reforms Implemented

The comprehensive budget package includes a variety of measures aimed at both increasing revenue and controlling expenditure:

• Taxation: Targeted tax increases include a rise in VAT to **12%** for specific services such as hotel stays, campsites, sports activities, and certain takeaway meals. Excise duties on natural gas will increase, while those on electricity will decrease. A **€2 tax** will be introduced on small parcels originating from outside the EU, and the securities account tax will be doubled. The bank tax is also set to rise.
• Spending Cuts: The government aims to save nearly **half a billion euros** from the federal civil service by **2029**. This will be achieved through a partial hiring freeze, allowing departments to replace only two out of every five departing staff, with exemptions for security and justice services. Higher employer pension contributions for newly appointed permanent civil servants are also part of this effort, projected to deliver **€459 million** in savings by **2029**.
• Social and Labor Reforms: Efforts will be made to return **100,000 long-term sick individuals to work** by **2029**, a measure expected to generate **€2 billion** in savings. Modifications to the wage indexation system, including a cap for salaries above **€4,000 gross per month**, are expected to commence in **2027**. Healthcare spending growth will be limited, with the sector needing to make approximately **€600 million** in adjustments for the upcoming year.
• Governance: A financial prosecutor's office will be established, supported by the hiring of **370 agents**.

Outlook and Challenges

The budget negotiations were protracted, leading to the federal government's reliance on a provisional twelfths system for the initial months of the year. The agreement has also drawn criticism from unions, who view the package as a continuation of austerity measures and have called for strikes. Despite the government's efforts, the projected deficit and rising debt ratio indicate that further fiscal consolidation may be necessary to meet long-term stability goals.