BELGIUM – Ratings agency Standard & Poor’s says reform of the pension system is part of a set of measures that are “essential” to the country’s plans to lighten taxation and improve budgetary flexibility.

In a research note, S&P affirmed its AA+/A-1+ rating on Belgium and said the outlook was stable.

“The stable outlook reflects the government's commitment to a prolonged period of fiscal consolidation,” it said. “Over the medium term, debt reduction and reform of the social security and pension systems are essential to plans to lighten the tax burden and improve budgetary flexibility over the cycle.”

The rating reflected Belgium’s strong fiscal performance, commitment to fiscal consolidation and a decline in the government debt.

S&P expected economic growth to average 1.4% in 2003 against a budget forecast of 2.1% - although the budget was expected to remain balanced in 2003.

S&P noted Belgium’s “broad commitment across the political spectrum” to fiscal discipline. It added that Belgium's government debt burden, at an estimated 103% of gross domestic product is the third highest of all rated sovereigns. It “remains the single most significant constraint on the kingdom's credit standing”.

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