A SUPPLEMENT TO EUROMONEY - MAY 1996
Belgium's leap of faith
There is a sense of now-or-never in Brussels. The Belgian government believes that without fundamental reforms its small economy will not operate effectively in a Europe which has introduced a single currency and thrown open regional marketplaces to foreign competition. Limited ambitions which were realistic 10 years ago now look inadequate against the economic and market changes Belgium is about to face.
Belgium's economy and local capital markets stand to lose substantially from Emu unless they change now. The Belgian government, led by prime minister Jean-Luc Dehaene, has realized that, if Belgium does not act quickly, its economy could fall so far out of step with the rest of Europe that Belgium will not be able to join European monetary union. If this happens the Brussels stock exchange would lose business so fast that it might not survive. Even the country's bond market could collapse in the face of speculation against the Belgian franc.
But the present Belgian government is noteworthy for its apolitical and single-minded approach to monetary union. After eight years in the job, finance minister Philippe Maystadt is moving fast. A commission of strategists - the Maystadt Commission - is working on further market deregulation; the finance ministry has introduced innovations such as the X-N tax exemption scheme; and privatization is progressing more quickly.