State Secretary for Budget Alexia Bertrand (Open VLD) gives a negative advice for the issuance of a new one-year government bond at a reduced withholding tax rate of 15 percent. “It is not appropriate from a budgetary perspective,” she says.
Tuesday, February 13, 2024 at 5:42 PM
The Debt Agency announced on Tuesday that it will issue two government bonds on March 4: one for one year and one for 3 years. For the former, the agency recommends a reduced withholding tax rate of 15 percent instead of the usual 30 percent. Minister of Finance Vincent Van Peteghem (CD&V) issued a similar tax-friendly government bond last summer and raised almost 22 billion euros. The government – in this case State Secretary for Budget Alexia Bertrand (Open VLD) – had to give its approval for that reduced rate by February 19.
However, Bertrand has no intention of doing so, her spokesperson told the Belga news agency. The interest costs of the federal government will increase from 10.3 billion to approximately 14 billion euros by 2028 and it is currently much cheaper to borrow for ten years than for one year, it is said. “It is therefore not appropriate from a budgetary point of view to additionally support the more expensive 1-year interest rates with a reduced withholding tax of 15 percent instead of 30 percent,” says Bertrand. As far as she is concerned, the government bond can be issued, but at the normal rate of 30 percent.
Jean Deboutte, the director of the Debt Agency, does not follow Bertrand’s arguments. “They involve something that has nothing to do with it,” he says. “The fact that long-term interest rates are now lower is beside the point.” Deboutte emphasizes that in December the 2024 financing plan stipulated that 13.5 billion euros will be raised through short-term debt. This is done via government bonds or treasury certificates. In December, Deboutte assumed that the government would again make use of the reduced withholding tax.
The Council of Ministers can still overrule Bertrand’s advice. But that seems unlikely since the State Secretary herself is part of the Council of Ministers and she can at least count on the support of her Liberal colleagues. It is not yet known when the government will look into the file, but it may not happen until after the spring break.
Support for agriculture
The Debt Agency wants to raise 6 billion with the issuance of both government bonds. You can register from February 22. The coupons for both government bonds will be announced on Tuesday, February 20, 2024. You can register via a placement institution from Thursday, February 22, 2024 to Friday, March 1, 2024. You can register via the General Ledger from Thursday, February 22, 2024 to Thursday, February 29, 2024.
Ecolo Deputy Prime Minister Georges Gilkinet insists on using the proceeds from the state vouchers for mobility and energy measures and for support to farmers. The savings borrowed from citizens “should be used to limit as much as possible the costs of inaction, which unnecessarily burden public finances,” he believes.
