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Belgium: Staff Report for the 2011 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund
Published Date:
March 2012
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FUND RELATIONS

(As of January 31, 2012)

Missions: Brussels, November 30—December 12, 2011 and January 24–27, 2012.

Staff team: Mr. De Vrijer (Head), Ms. Ohnsorge, Mr. Weber (all EUR), Mmes. Erbenova and Nedelescu (MCM), and Mr. Acosta–Ormaechea (FAD).

Country interlocutors: The Prime Minister; the Vice–Prime Minister and Minister of Finance; the Vice–Prime Minister and Minister of Economy; the Minister for the Budget; the Minister of Employment; the Governor of the National Bank of Belgium; the Director of the Treasury; the Chairman of the Financial Services and Markets Authority; the Head of the Federal Planning Bureau; the Head of the Central Council for the Economy; the Head of the Competition Authority; staff of the Prime Minister and Vice–Prime Ministers’ offices, the Federal Ministry of Finance, the Federal Ministry for the Economy, the Federal Ministry of the Budget, the Federal Ministry for Employment, the Federal Ministry of Pensions; the staff of the Public Borrowing Section of the High Finance Council; the health care administration; the regional ministries of the budget for Flanders, Brussels and Wallonia, respectively; the Minister of Finance of Brussels–Capital Region; the Minister of Finance of Flanders; the Minister of Finance of Wallonia; and representatives of labor unions, employer organizations, the financial sector, think tanks, and academia. Mr. Kiekens (Executive Director) or Mr. De Lannoy (Advisor to the Executive Director) attended the meetings.

Data: Belgium subscribes to the Fund’s Special Data Dissemination Standard, and comprehensive economic data are available on a timely basis (Appendix II).

Membership Status

Joined: December 27, 1945; Article VIII

General Resources Account

SDR MillionPercent

Quota
Quota4,605.2100.00
Fund holdings of currency3,193.6169.35
Reserves tranche position1,411.6130.65
Lending to the Fund
New Arrangements to
Borrow819.61

SDR Department

SDR

Millions
Percent

Allocation
Net cumulative allocations4,323.34100.00
Holdings4,233.8797.93

Outstanding Purchases and Loans

None

Latest Financial Arrangements

None

Projected Payments to the Fund

(SDR Million; based on existing use of resources and present holdings of SDRs)

Forthcoming
20122013201420152016
Principal
Charges/Interest0.190.180.180.180.18
Total0.190.180.180.180.18

Implementation of HIPC Initiative

Not applicable

Implementation of Multilateral Debt Relief Initiative

Not applicable

Implementation of Post-Catastrophe Debt Relief

Not applicable

Exchange Arrangements

  • Belgium’s currency is the euro, which floats freely and independently against other currencies.

  • Belgium has accepted the obligations under Article VIII and maintains an exchange system free of restrictions on payments and transfers for current international transactions, except for restrictions maintained solely for security reasons. These measures are established by European Union regulations and have been notified to the Fund pursuant to Executive Board Decision No. 144-(52/51).

Article IV Consultation

Belgium is on the 12–month consultation cycle. The previous Article IV consultation was concluded on March 23, 2011. The associated Executive Board’s assessment is available at http://www.imf.org/external/np/sec/pn/2011/p n1143.htm and the staff report (IMF Country report No. 11/81) at http://www.imf.org/external/pubs/cat/longres. aspx?sk= 24768.0.

FSAP Participation

FSAP Assessment

IMF Country Report No. 06/75

Summary: The report concluded that Belgium’s financial system is resilient and benefits from a number of features that help stability. These include a traditionally cautious attitude toward risk by banks, large holdings of government securities, extremely low holdings of equity by banks, a stable source of funding benefiting from generous tax incentives, a high standard of banking supervision, and a stable macroeconomic policy framework. Overall, supervision showed a high degree of compliance with international standards. Near–term vulnerability appears low, reflecting the soundness of the dominant banking system, the generally benign financial environment, the strong financial condition of the corporate sector, and the relatively healthy financial position of the household sector. Financial institutions were found to withstand an adverse macroeconomic stress well, helped in part by the beneficial diversification in the bancassurance model.

The 2005 Mutual Evaluation Report on the Assessment of Anti–Money Laundering and Combating the Financing of Terrorism (AML/CFT) measures prepared by the Financial Action Task Force (FATF) indicates that Belgium’s AML/CFT framework applicable to financial institutions is comprehensive and broadly compliant with FATF standards in this area.

Notwithstanding the strengths of the Belgian financial sector, a number of issues emerged from the FSAP. The heavy exposure abroad, the open nature of the economy, and the importance of the Euroclear Group globally, made the domestic financial system potentially vulnerable to global economic developments and financial contagion. Risks remained and may increase with a downturn in the business cycle, increased cross–border operations, and deeper links with the global money centers. In line with the 2005 FSAP recommendations, the supervisory framework has been strengthened. The Banking, Finance, and Insurance Commission’s (CBFA) management committee has been streamlined and synergies between the CBFA and the National Bank of Belgium (NBB) have been further developed. Regular stress tests have helped promote a systematic dialogue between supervisory authorities and market participants, while detailed procedures for financial crisis management have been tested. Prudential supervision of the insurance sector has been upgraded and regulation of the pension funds sector reinforced.

Technical Assistance

None

Resident Representative

None

STATISTICAL ISSUES

Belgium’s economic and financial statistics are adequate for surveillance purposes. The National Bank of Belgium (NBB) regularly publishes a full range of economic and financial data and provides calendar dates of main statistical releases. On–line access to these comprehensive databases is facilitated by the NBB’s data search engine, Belgostat. Belgium is a SDDS subscriber. Statistics for International Financial Statistics on banking institutions and monetary aggregates are prepared on a monthly basis and are timely.

Belgium adopted the European System of Integrated Economic Accounts 1995 (ESA95) in 1999. Revisions of national accounts started in November 2005 to comply with EUROSTAT requirements and prepare for the adoption of chain–linked national accounts statistics. Unlike in other countries, the NBB is responsible for compiling national accounts statistics. Quarterly accounts are published within a lag of three months. Both annual and quarterly accounts data are of good quality, with shortcomings mainly related to export and import deflators, which are based on unit values, rather than prices collected directly from exporters and importers.

General government revenue, expenditure, and balance on an accrual basis (ESA95) are published annually. The NBB publishes monthly data on central government operations and quarterly data on general government operations since April 2007.

The overall quality and availability of financial indicators are good. The authorities are providing quarterly updates of financial sector indicators (FSIs) in a timely manner.

Key publicly accessible websites for macroeconomic data and analysis are:

National Statistical Portal www.belgostat.be

National Statistics Institute www.statbel.fgov.be

Institute for National Accounts www.inr–icn.fgov.be

National Bank of Belgium www.nbb.be

Federal Planning Bureau www.plan.be

Banking, Finance, and Insurance Commission www.cbfa.be

High Finance Council www.docufin.be

Central Economic Council www.ccecrb.fgov.be

Belgium: Table of Common Indicators Required for Surveillance(As of January 17, 2012)
Date of

Latest

Observation
Date

Received
Frequency

of

Data6
Frequency

of

Reporting6
Frequency

of

Publication6
Exchange Rates2/16/122/16/12DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities112/111/12MMM
International Investment Position20102/11AAA
Reserve/Base Money12/111/12MMM
Broad Money12/111/12MMM
Central Bank Balance Sheet12/111/12MMM
Consolidated Balance Sheet of the Banking System12/111/12MMM
Interest Rates22/16/122/16/12DDD
Consumer Price Index1/122/12MMM
Revenue, Expenditure, Balance and Composition of Financing3––General Government42011:Q31/12QAA
Revenue, Expenditure, Balance, and Composition of Financing3––Central Government2011:Q31/12QAA
Stocks of Central Government and Central Government–Guaranteed Debt512/111/12MMM
External Current Account Balance2011:Q312/11QQQ
Exports and Imports of Goods and Services11/112/12QQQ
GDP/GNP2011:Q42/12QQQ
Gross External Debt2011:Q312/11QQQ

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market–based and officially–determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A), irregular (I); and not available (NA)

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market–based and officially–determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D), weekly (W), monthly (M), quarterly (Q), annually (A), irregular (I); and not available (NA)

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