Abstract
IMF Country Report No. 23/99
Copyright Page
IMF Country Report No. 23/99
BELGIUM
SELECTED ISSUES
March 2023
This Selected Issues paper on Belgium was prepared by a staff team of the International Monetary Fund as background documentation for the periodic consultation with the member country. It is based on the information available at the time it was completed on February 10, 2023.
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© 2023 International Monetary Fund
Title page
BELGIUM
SELECTED ISSUES
February 10, 2023
Approved By
European Department
Prepared By Andre Geis, Yu Ching Wong (both EUR) and Nate Vernon (FAD).
Contents
WAGE INDEXATION AND INTERNATIONAL COMPETITIVENESS IN BELGIUM: AN UNEASY COEXISTENCE
A. Introduction
B. A Burst of Inflation Explained: Blaming the Usual Suspects?
C. Wage Formation in Belgium: Getting the Best of Both Worlds?
D. Systemic Weaknesses of Wage Formation and Policy Recommendations
References
FISCAL FEDERALISM IN BELGIUM: CHALLENGES IN RESTORING FISCAL SUSTAINABILITY
A. Introduction
B. How Has Fiscal Decentralization Evolved in Belgium?
C. Key Challenges in Federal and Subnational Public Finances in Belgium
D. Policy Options to Improve Debt Sustainability Under Fiscal Decentralization
E. Conclusions
BOX
1. Evolution of Fiscal Federalism in Belgium
FIGURES
1. Progress in Fiscal Decentralization (1995–2020)
2. Economic and Social Characteristics by Regions
TABLES
1. Financing Sources of Expenditure in Flanders, Wallonia, Brussels, and the French Community
2. Summary of Fiscal Positions: Net Lending (+)/Borrowing (-)
References
FISCAL POLICY OPTIONS TO ACCELERATE EMISSIONS REDUCTIONS IN BELGIUM
A. Background
B. EU and Belgian Policies
C. Reforming Existing Fuel Taxes and Introducing Economy-Wide Carbon Pricing
D. Reinforcing Carbon Pricing with Feebates and Other Sectoral Policies
E. Conclusion and Summary of Policy Recommendations
BOXES
1. Response to the 2022 Energy Crisis
2. Carbon Taxes vs. Cap-and-Trade Systems
FIGURES
1. Global GHG Emissions vs. Targets and Pledges
2. Trends in Historical Emissions and Projections under BAU Policies
3. Emissions Trends across Europe
4. Daily EU ETS Price
5. Excise Rates and Consumption by Fuel and Use
6. Effective Carbon Tax Rates by Section in 2021
7. Price Impacts of Carbon Pricing, Compared to Efficient Levels
8. Distributional Impacts of a €100 per Ton Carbon Tax
9. Illustrative Feebate for Power Sector
10. Electricity Mix under Various Scenarios
11. Relative Price of Electricity
12. Illustrative Average Annual Cost of Heating Options
13. CO2 Emissions of New Cars
14. CO2-Based Components of Vehicle Taxes
TABLES
1. Summary of Mitigation Targets
2. Carbon Pricing in Non-ETS Sectors
3. Sectoral Emissions Outcomes, 2030 Relative to 2005 Levels
APPENDIX
I. Recent Studies on Climate Mitigation Policies and Other Carbon Taxes in Belgium
References