Credit rating agency Moody’s downgraded the creditworthiness of Flanders. Finance and Budget Minister Matthias Debendaele (N-VA) said he was “proud of the support we have given to business people from Flanders”, and is working on a proposal to tackle the Flemish debt ratio.
Rating agency Moody’s lowered Flanders’ creditworthiness from Aa2 to Aa3. Wallonia and the French Community were also downgraded. Moody’s notes the significant downside pressure from the coronavirus pandemic and the potentially lasting impact of the crisis on deficits and debt in the affected regions.
In response, Flemish Minister Debendaele said that the Flemish government took responsibility during the Corona crisis and allocated the necessary expenditures to support the economy and society. The taste of this is bittersweet. We can be proud of the support we have given to our entrepreneurs from Flanders. By doing this, we have kept our economy on the right track and we also got an appreciation for this. But these additional expenses inevitably brought Additional debt with him. As a result, our rating is adjusted.”
Dependail is now working on a proposal to address this debt ratio. He will join the government this week or the next. “Sound public financial resources remain my priority.”
In normal times, the Flemish government would aim for a debt ratio of about 65 percent of receipts. But without a revised policy, that debt ratio threatens to flirt with a 100 percent limit by 2026. So Dependail wants to slow the upward trend and eventually reverse it back toward 65 percent.
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