In ten days, there could be a new Walloon government. MR and Les Engagés want to break with decades of socialist policy and focus on higher employment and more entrepreneurship. But given the precarious budget situation, the Walloon government will be more austere than reformist.
On Tuesday 16 July, the newly elected MEPs will be sworn in. Among them is the outgoing Walloon Prime Minister, Elio Di Rupo (PS). This means that he will have to leave the Elysee, his official residence in Namur, on that day. In this case, the Minister of Labour, Cristy Morreale (PS), will become the interim Prime Minister of Wallonia. The liberals of the Communist Movement (MC) and the centrists of Les Engagés, who currently form the Walloon government, want to avoid this at all costs. The transfer of power must be carried out by Di Rupo, a symbol of the old socialist politics. The intention is therefore for a new coalition agreement in Wallonia to be in place before 16 July and for the ministers to be sworn in by that date.
The negotiations for a centre-right coalition south of the linguistic border are therefore in their final stages. However, MR and Les Engagés have received little encouraging news. Last week, the SERBIE Institute for Economic Research at the University of Namur published a worrying study on Walloon public finances. The Walloon region’s debt currently stands at €28.3 billion, rising to €38.7 billion in 2029, at the end of the legislative term.
About €1 billion in interest costs
What particularly worries Serbe is the development of interest charges on the debt. This year, the Walloon government has to pay €522 million in interest costs to finance this debt. This amount will rise to €982 million by 2029. This is equivalent to 6% of Walloon income (€17.5 billion). According to economists from Namur, Walloon debt is still financeable, but they warn of the impact of rising interest rates and slowing growth. These millions in interest costs cannot be used to implement policy.
It is therefore clear that the next Walloon government will have to make savings mainly to reduce the budget deficit and put an end to the rise in interest costs. The president of the MR, Georges-Louis Bouchez, has already made it clear that this is indeed the intention. He was helped by calculations carried out by the Itinera think tank, which show that the number of ministers, elected officials and civil servants in Wallonia is two to three times greater than in Flanders.
Enough resources to implement real policy?
The next Walloon government will therefore essentially be an austerity government. According to Serpe, structural and cumulative annual savings of €150 million per year are needed. In five years, the amount will be €750 million. The question is whether there is still room in the budget to enable a number of much-needed reforms. For example, the employment rate in Wallonia must increase by 66%. This can only happen through more efficient recruitment by Forem, the Walloon VDAB. The next Walloon government could also use its financial autonomy to lower taxes on employment and make work more attractive. Just as the Flemish government did with the Job Bonus. But does Wallonia have the money for such a tax cut? The same question arises about the means of stimulating entrepreneurship through subsidies or tax cuts. Because the reduction in inheritance taxes that the MR-Les Engagés coalition wants to implement will also not be financed.
No poochies in Namur
Meanwhile, it has become clear that Georges-Louis Boucher does not aspire to become Prime Minister of the Walloon government. He remains party leader and wants to influence the formation of the federal government. Furthermore, he is considering running for mayor of his home city of Bergen next October. Two names are vying for the post of Walloon Prime Minister. Pierre-Yves Guihoulet (MR), the outgoing Prime Minister of the French Community, is respected for his administrative experience. Walloon Budget Minister Adrien Dolimont (MR) is the other name.
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