Belgium needs Emu: the political solution to its economic problems

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Belgium needs Emu: the political solution to its economic problems

Will Belgium turn its economy around in time for European monetary union? Without Emu, the Belgian government fears that Belgian franc and government debt issues will be punished by the markets

Will Belgium clear the final hurdle? Belgium's leap of faith  

"Nineteen ninety-six will be a special year for Belgium," prime minister Jean-Luc Dehaene told international investors recently. "Our country will reach the 3% target for the budget deficit. This will end our 15-year journey through the fiscal desert."


Talk of Emu has scarcely been off premier Dehaene's lips since his centre-left coalition returned to power in the May 1995 elections. Compliance with the Maastricht criteria is more important to the Belgian government than any other objective during this four-year term of office. Dehaene is passionately keen to ensure that Belgium is included in the first group of countries to adopt a single currency - perhaps as early as 1999.


Belgium's achievements on three standards - price stability, interest rates and stable exchange rates - are so solid they are dull. Consumer prices rose by just 1.5% last year, and the Belgian franc is so closely aligned with the Deutschmark that the Belgian National Bank is in danger of losing its credibility as an independent entity. The National Bank has scarcely broken step with the Bundesbank over the past year as the Germans have eased their repo rate downwards in many tiny steps.



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