This 2015 Article IV Consultation highlights that Belgian economy has shown considerable resilience but the outlook is weighed down by weak demand in Europe. Healthy private balance sheets, integration with Germany, and employment support schemes have helped sustain employment and economic activity. However, output is still well below potential and with, subdued growth prospects, job creation remains insufficient. Fiscal adjustment is expected to resume after a pause in 2014. The pace of adjustment targeted by the authorities for 2015–16 is appropriate given the level of debt and related risks.
The 2014 Article IV Consultation discusses economic developments and policies in Belgium. It highlights that despite its resilience, the Belgium economy has been losing competitiveness due to higher labor cost and lower productivity growths than peer countries. The government has taken measures to close the wage gap, but it is highlighted that the economy also needs to become more productive and adaptable through deeper product and labor market reforms. The supervisory and regulatory frameworks are being strengthened with a new draft banking law that restrains trading activities and improves the recovery and resolution framework.
Gerd Schwartz, Manal Fouad, Torben Hansen, and Geneviève Verdier
Public infrastructure is a key driver of inclusive economic growth and development and the reduction of inequalities. Roads, bridges, railways, airports, and electricity connect markets, facilitate production and trade, and create economic opportunities for work and education. Water and sanitation, schools and hospitals improve people’s lives, skills, and health. Also, if done right, broad-based provision of public infrastructure can support income and gender equality; help address urgent health care needs (for example, during epidemics); reduce pollution; and build resilience against climate change and natural disasters.
Public infrastructure projects are typically large and complex, with long planning, implementation, and operational periods, and as such they are inherently exposed to uncertainties and risks. However, project risks are often not well integrated in infrastructure governance frameworks and receive only moderate attention during major investment decisions. Governments’ decision making is typically shortsighted, and the long-term costs and benefits are poorly reflected in most standard budget systems. Moreover, while planning and monitoring systems may help decision makers get an impression of the long-term effects of infrastructure projects, these systems are often limited in their scope and coverage. As a result, risk management of infrastructure projects remains underdeveloped and project outcomes often deviate significantly from expectations or forecasts.
This chapter was drafted with funding support from the Korea Development Institute School Partnership Trust Fund. The authors thank Jim Brumby (Senior Advisor, World Bank), Carolina Renteria (Division Chief, IMF), Ceren Ozer (Senior Governance Specialist, World Bank), and Ian Hawkesworth (Senior Governance Specialist, World Bank) for their overall support and guidance; Isabel Rial (Senior Economist, IMF) for assistance with navigating the PIMA data set; and Jay Hyung-Kim (Advisor, World Bank) and Xingjun Ye (Research Analyst, World Bank) for useful inputs.
Chapter 3 focused on how improving infrastructure governance to produce better outcomes from existing assets is among the critical ways to close the global infrastructure gap. To improve these outcomes, countries should look to both maintain their assets—routinely preserve the quality of individual infrastructure assets and renovate them in good time and with the right amount of funding—and manage their portfolio. This chapter turns to how a life-cycle approach to the development and use of public assets is key to their management, along with optimizing balance sheets to maximize returns. Asset maintenance and management needs are particularly salient in a context of aging infrastructure, especially in some advanced economies (IMF 2014b), where large infrastructure networks were developed during the second half of the 20th century.
Governments face growing economic and fiscal liabilities because of the increased scope and scale of climate change and the disasters it induces. While the many spillover effects cause damage to private property, public infrastructure, and services such as communications, transportation, and utilities, the economic losses can well exceed the cost of replacement. A road bridge that is washed away not only drains resources to replace it and hits economic activity, but where alternative transportation routes are minimal or costly, the net private benefit to bridge users is also lost. The longer it takes to repair the bridge or provide alternative transport routes, the more the economic loss accumulates.