Belgium: Selected Issues

This Selected Issues paper examines intertwined challenges such as increasing public investment, fostering digitization, and supporting the green transition as part of fiscal consolidation in Belgium. There is significant scope to improve the coordination and burden sharing of fiscal consolidation and public investment among federal and federated entities. Clearly defined and communicated national goals would help anchor firms’ expectation and guide their long-term strategies and investments in line with sustainability objectives. Fostering higher public investment in the green transition requires harmonizing energy policies, delivering clear market signals, and phasing out or repurposing fossil fuel subsidies. Belgium has significant opportunities to enhance its digital and energy infrastructure, which are critical for closing competency gaps and achieving a successful green transition. The energy sector faces challenges due to high greenhouse gas emissions and reliance on fossil fuels, necessitating increased public investment to support clean energy initiatives. The government needs to reallocate funds from existing subsidies for fossil fuels to green investment and measures that support renewable energy adoption and technological innovation.