Box 2 - Belgium—The High Council of Finance
Belgium established an “independent fiscal council” in 1989 in the context of a substantial fiscal
decentralization reform. The aim was to provide a coor¬dinating mechanism for general government fiscal
policy to secure macro¬economic stability. The council was officially established as the “Public Sector
Borrowing Requirement Section” of the already existing “High Council of Finance.” (The other sections are
“Taxation and Social Security Contributions,” “Transfer of Federal Collected Tax Revenues,” and “Financial
Institutions and Markets,” and a “Study Group on Ageing.”) The council complements the role of the Federal
Planning Bureau, which is a relatively independent government body and provides independent economic
forecasts that must be used for official purposes, long-term forecasts, and policy analysis.
Belgium’s council has a relatively strong mandate. First, it publishes two yearly reports: (1) in March, an
assessment of the implementation of the internal stability program during the previous year; and (2) in June, an
analysis of the borrowing requirement of each of the local governments, as well as the budget¬ary policy to be
adopted, including specific recommendations on the budget bal¬ances of the three levels of government.
Second, the council may give its opinion, on its own initiative or upon request of the federal finance minister,
regarding the advisability of restricting the borrowing requirement of governments due to considerations about
short- or long-term macroeconomic stability.
However, the council is explicitly limited to commenting on the borrowing requirement. It must not comment
on general fiscal policy (particularly tax and expenditure policies) or social and economic policies in a wider
sense. Still, it can make reference to a broad range of issues in the context of its rec¬ommendations pertaining
to fiscal sustainability, including politically sensitive issues such as expenditure pressures arising from aging. In
its assessment of the fiscal stance and its recommendations, it is guided by the long-term fiscal frameworks
agreed between the different levels of government.
The council is composed with a view to equal representation and inde¬pendence. Its 12 members are appointed
by the king upon proposal by the regional governments, the central bank, and the ministry of finance. The
chairman (from its inception) is an academic. Six members each have to come from the Flemish and the
francophone community, respectively. The members are appointed for renewable five-year mandates. They
have to be economic experts and must not hold a political office at the same time to ensure their independence.
Recommendations by the council have to be supported by a majority of its members.
The council’s recommendations were followed closely as long as its views were aligned with political priorities.
During the 990s, the council was charged with monitoring the implementation of the government’s
“convergence plan” that envisaged reducing the fiscal deficit to the Maastricht criterion of 3 percent of GDP by
- During that period, its recommendations for the deficit were closely adhered to and—according to
anecdotal evidence—contributed to the substantial fiscal consolidation during that period. Since the downturn in
200 , however, the council’s recommendations seem to have been followed less closely. The downturn provided
the context for a downward revision of the medium-term consolidation plan for 200 –05. However, even the
council’s recommendation for meeting these revised targets was not fully implemented. As a consequence, the
budget outcomes, adjusted both for the cycle and one- off measures, were negative at the general government
level over the period 200 –04 (Van Rompuy, 2005).