BRUSSELS, Nov. 6 (Xinhua) -- Belgium is set to resume budget negotiations after King Philippe rejected Prime Minister Bart De Wever's resignation on Friday, but divisions within the five-party coalition over how to reduce the country's budget deficit remain unresolved.
The king asked De Wever to resume budget negotiations immediately and report back on Nov. 16, according to a statement issued by the Royal Palace. Leaders of the five governing parties pledged to make concessions to reach an agreement on a sound budget path for the next three years.
The decision came four days after De Wever offered his resignation following the collapse of budget talks.
Analysts say the king's decision has given the coalition more time to seek a compromise, but reaching an agreement remains difficult. Even if the government succeeds in securing the planned fiscal adjustment, Belgium may still struggle to meet the European Union's deficit target by 2029.
DEEP DIVISIONS OVER BUDGET
At the heart of the political standoff is a dispute over how to achieve a fiscal adjustment of about 10 billion euros (11.2 billion U.S. dollars) by 2029 and how the burden should be shared.
The five-party coalition remains divided over the balance between spending cuts and tax increases.
De Wever's New Flemish Alliance (N-VA) and the Reformist Movement (MR) favor greater reliance on spending cuts and structural reforms, while Vooruit, CD&V and Les Engages have pressed for a greater contribution from wealthier groups. Differences over proposed reductions in health care and social spending have also complicated negotiations.
The disagreements highlight the difficulty of balancing fiscal consolidation with social demands in a country already facing a heavy tax burden and rising public spending pressures.
Jean Faniel, director of Belgium's Centre for Socio-Political Research and Information (CRISP), told Xinhua in a written interview that the budgetary effort required was substantial and came on top of reforms already carried out in previous months.
Finding new sources of savings has therefore become increasingly difficult, hardening the parties' positions and complicating efforts to reach a compromise, he said.
Peter Vanden Houte, chief economist at ING Belgium, said the country's already high tax burden leaves limited room for further increases without risking damage to long-term economic growth.
"At the same time, it is unlikely that the required fiscal adjustment can be achieved through spending cuts alone," he told Xinhua in a written interview.
Citing a report on Belgium released Tuesday by the Organization for Economic Cooperation and Development (OECD), Vanden Houte said deficit reduction should rely on a balanced approach, with roughly one-third coming from additional revenues and two-thirds from expenditure restraint.
MOUNTING FISCAL PRESSURES
The budget dispute comes as Belgium faces growing pressure to bring its public finances under control.
According to the OECD report, Belgium's public debt exceeded 100 percent of gross domestic product (GDP) in 2025, while its budget deficit stood at more than 5 percent of GDP, both above EU reference values.
Longer-term projections from Belgium's Federal Planning Bureau also point to mounting fiscal pressures, with public debt and deficits expected to rise further in the coming years under current policies. The EU has required Belgium to correct its excessive deficit by 2029.
Yet even the fiscal measures currently under discussion may prove insufficient.
"Even if the government succeeds in implementing 10 billion euros of savings over the next three years, which is currently under discussion, the deficit would still remain close to 4 percent of GDP," Vanden Houte said.
He added that the measures on the table represent the minimum needed to keep public finances on a sustainable path, but would not be enough to bring the deficit below the EU's 3-percent reference value by 2029.
Belgium's fragmented political landscape has further complicated efforts to tackle its fiscal problems. Most major political parties are organized along linguistic lines, making coalition-building particularly difficult.
Following the 2010 elections, Belgium took 541 days to form a new federal government. The current coalition took nearly eight months to form following the 2024 elections.
The government's reforms have also met opposition from trade unions, while repeated strikes and demonstrations have been held against pension and unemployment benefit reforms.
"It takes at least two to reach an agreement. Unfortunately, the government systematically bypasses us and forces through policies that should be a matter for social dialogue," Selena Carbonero Fernandez, general secretary of the socialist trade union FGTB, told Xinhua in a written interview.
UNCERTAIN OUTLOOK
The failure to reach a budget deal has raised questions about the government's ability to carry out its fiscal plans.
Speaking in the Chamber of Representatives on Thursday, De Wever acknowledged that Belgium would have to begin 2027 under a provisional budget system, as it did this year, despite having previously ruled out such an arrangement.
The mechanism allows the government to continue operating without an approved budget, generally limiting monthly spending to one-twelfth of the previous year's appropriations.
De Wever described the prospect as a major failure for his government and said difficult decisions were needed to address the country's problems.
Faniel said the coalition parties' increasingly rigid positions made it difficult to find a way out of the crisis.
Although all five parties believed an agreement was necessary, simply expressing that determination would not be enough to bring their positions closer together, he said.
"Success remains possible, but so does failure."
Meanwhile, social and political pressure continues to build. Belgium's three main trade unions have called for a national demonstration in Brussels on Nov. 23, while opposition parties have stepped up criticism of the government.
Business groups have also expressed concern about the potential economic consequences of a prolonged political crisis.
Pieter Timmermans, chief executive of the Federation of Enterprises in Belgium (FEB), warned that financial markets were paying increasing attention to Belgium and that now was "not the time to provoke a political crisis."
Vanden Houte said a prolonged impasse could heighten market concerns and further widen the yield spread between Belgian and German government bonds.
Although he did not expect an immediate credit rating downgrade, he said some rating agencies could revise Belgium's outlook to negative if the deadlock persisted.
With budget negotiations set to resume, whether the coalition can bridge its differences over fiscal measures remains uncertain.
