May 1997
The accountability dilemma
Apart from some well-publicized swap operations that may have turned sour, Belgium's treasury has reduced the kingdom's cost of borrowing dramatically. But, as Charles Piggott reports, potential losses on contracts signed in the early 1990s have raised important questions for all sovereigns trying to balance market confidentiality with public accountability.
"It's not that easy to shift a debt as large as Belgium's," says economist Kristin Vandenbergen at Bank Bruxelles Lambert (BBL), as she flicks through the pages of Belgium's public debt statistics looking for the latest figures. Under the terms of the 1992 Maastricht Treaty, prospective entrants to European economic and monetary union (Emu) must meet, or make "satisfactory progress" towards meeting, a ratio of debt to GDP of 60%. They must also convince the European Commission, and ultimately the council of ministers and heads of state, that debt levels are sustainable.
Belgium's boule de neige - as the country's debt is known in Brussels - "is beginning to melt", says Vandenbergen. But at 127% of GDP the ratio is the highest in Europe. When Wilfried Martens (the prime minister before Jean-Luc Dehaene), foreign affairs minister Mark Eyskens, and finance minister Philippe Maystadt signed the Maastricht Treaty in 1992, Belgium's...
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