Why Arizona must put the state on a diet again

Belgium’s Arizona coalition is heading toward another financial reckoning. The federal government faces at least a month and a half of intense negotiations to repair the country’s public finances, with 10 billion euros to be found.

Prime Minister Bart De Wever and Budget Minister Vincent Van Peteghem are due to hold bilateral talks next week with the five parties in the governing majority. Their aim is to produce a savings plan that can win consensus. If an agreement appears within reach, the government will meet in conclave.

A date highlighted on the political calendar is October 13, the official reopening of the federal Parliament. The prime minister traditionally uses that occasion to deliver the State of the Union and outline the government’s program for the year. After failing to reach an agreement before July 21, De Wever has made mid-October his new deadline. The pressure is greater this time, because the European Commission expects the outline of Belgium’s plan no later than a week after Parliament returns.

The financial figures have deteriorated. Forecasts from the Bureau of the Plan and the Monitoring Committee, released days apart in June, pointed in the same direction. Growth in 2026 is now expected to reach only 0.7% of gross domestic product, down from an earlier estimate of 1.1%, while renewed inflation has pushed the forecast for consumer-price growth to 3.6%, compared with 1.9% in February.

Those figures have worsened an already difficult budget outlook. The Bureau of the Plan expects the combined deficit of the federal and regional authorities to reach 6.4% of GDP in 2031, up from a February estimate of 5.7%. The government’s own target was 4.9%.

The Arizona coalition argues that the deficit would be even larger without reforms to unemployment benefits and pensions. Government circles say those measures will reduce the 2031 deficit by more than 12 billion euros, or about 2% of GDP. But the article presents those efforts as insufficient. Rising interest rates are the coalition’s major concern after years in which governments could borrow cheaply, with borrowing costs below economic growth. If the budget is not completed by mid-October, the coalition could enter an unstable period in which its survival is at stake.