Regions and communities.

The Flemish Community
The indebtedness of Flanders increases yearly. How can this be explained? Which policy-decisions has influenced it and what is the role of Europe?

Debt of the Flemish Community can be distinguished in four categories: the legal person ‘Flemish Government’, consolidated gross debt, the price of debt and the guaranteed debt.

1.      Legal person

According to the Belgian court of audit, the Flemish Government had a debt of 4.681 million euro in 2014. This is a slight increase in comparison to 2011 and 2012. However[dp1], if compared to 2010, when the Government still had a debt of 6.611 million euro, they are doing a lot better due to saving policy. This decrease gives good hope for the future (table 1).

2.       Consolidated gross debt

Consolidated gross debt means debt on long terms. As shown on the statistics, the total consolidated debt contributes 18.763,1 million euro in 2014. Remark: not all costs are included. Het Belgian court of audit has estimated a 50-million-euro gap with their calculations (Table 2).

3.       Cost price of debts  This includes interests and other extra costs for redemption of loans and more. The Flemish Government has paid 110,2 million euro in this category

 

4.      Guaranteed debt'''

Guaranteed debts are loans from organizations and governments that are protected by the Flemish Government. As you can see, the statistics show a strong increase in 2014. This can be explained by the low interest rates and severe bank conditions (Table 3). 

Different elements influence the total indebtedness. First of all, due to the sixth state reform a lot of responsibilities were transferred to the Flemish level such as economic policy, energy, etc. This means a lot more responsibilities, financial and political.

Secondly, the ageing of the population asks more and more attention. According to research of the Flemish Government, 25% of the population of Flanders will be 65 or older by 2030. To maintain this, the government anticipates already by building homes for elderly, stimulating the training of nursery, encouraging home care, Other factors like policy or the present refugee crisis also have an impact on the public debt.

To reduce this shortage, the governments made a ‘Pact2020’. This provides a cutback of the total consolidated debt of the Flemish Government by 2020. Unfortunately, this plan has disappeared in the Community budget of 2015.

Another solution is the Public Private Partnership (PPP). According to this vision governments costs will diminish because the strains of private organizations. The main idea is that the private sector gets an active role in the accomplishment of policy objectives. Consistent with simulations of the Flemish Government, PPP would diminish the governments to 22% of the investment instead of 73% (Publiek-private samenwerking en ESR-neutraliteit, 2005). Next, the government is making many cuts in his expenses, for example the dismissal of the living bonus, cuts in culture and education,…  This policy of cutbacks can be dangerous because it can cause negative effects on long-term but it has one big advantage: a budget in balance (Toelichting meerjarenraming 2016-2021, 2015).

The Belgian court of audit (control system of the Belgian State) has a few objections (Onderzoek van de aanpassing van de Vlaamse begroting 2015, 2015). The main objection is the financial hocus-pocus with numbers of the Flanders accountancy by eliminating expensive matters. Het Belgian court of audit stresses that the Flemish Government has to set a transparent objective to eliminate their consolidated debt in dialogue with the Federal Government.

In 2016, the Flemish Government expects a shortage of 291,7 billion euro (Table 4). This is included the costs of the refugee crisis. Besides, there is an expected increase of the consolidated debt caused by building the Oosterweel-construction (a complex infrastructural and political situation in Antwerp, for more information see https://www.oosterweelverbinding.be/) and the costs of housing (respectively VMSW and VWF, as seen in the table subsequent).