The International Monetary Fund’s Executive Board concluded the 2026 Article IV consultation with Belgium, assessing the economy as resilient to recent shocks but constrained by large structural fiscal deficits, rising public debt, weakened price competitiveness and a weaker external position. The Board called for sustained fiscal consolidation alongside well-sequenced structural reforms to reduce vulnerabilities, rebuild fiscal and external buffers, and support employment and productivity. Directors welcomed measures under the EU economic governance framework and the 2026 fiscal budget, but judged additional adjustment necessary to stabilize debt, citing rising age-related and defense spending pressures. Priorities highlighted included reducing current spending, improving the efficiency of public investment and social spending, and streamlining tax expenditures, with effective pension reform and stronger coordination across federal, regional and community governments to underpin a durable multi-year consolidation. On the macro outlook, growth decelerated to 1.1% in 2024 and is projected at 1.1% in 2025, with a slowdown expected in 2026 before returning to a 1.3% medium-term potential rate; inflation eased to 2.2% year-on-year at end-2025 and is expected to stabilize around 2% as energy costs fall and wage growth moderates. The financial sector was assessed as resilient, though pockets of vulnerability warrant monitoring; macroprudential policy should maintain sufficient buffers, with a further increase in the countercyclical capital buffer envisaged if overall risks do not abate, alongside continued implementation of 2023 Financial Sector Assessment Program recommendations and further strengthening of the AML/CFT framework.

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