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Conclusion
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Conclusion 291 Conclusion Françoise Thys-Clément 1 One of I.B.F.P’s (Belgian Institute of Public Finance) main missions is to provide precise analyses of the evolution of public finances. It is on this basis that, since after WWII, it has regularly published books on the decennial evolution of budgetary and fiscal policies. We must thank Etienne de Callataÿ to have conducted this monograph, as he had ten years ago, that describes the evolution of public finances from 2000 to 2010. The title clearly emphasizes the difficulties regarding the efforts carried out during the previous 20 years to bring the Belgian economy back on track. The book also presents an essential questioning of the future since the economic and politic paradigm has changed during the last ten years. How indeed can one not consider the future? Economists try to propose correcting measures of budgetary policies to face the damages caused to the real economy by the turmoil and turbulences induced by the world’s financial sector and the increasing public debt inflated by large budget deficits. Furthermore, they have to take into account that our country faces a double institutional transformation of both its internal federal structure as well as its international integration into a Euro zone that is struggling to prove its capacity to retain its current structure. 1. Françoise Thys-Clément is Professor at the Université libre de Bruxelles and member of the Académie Royale de Belgique – Classe des Lettres et des Sciences morales et politiques. She particularly wishes to thank Etienne de Callataÿ for the lively discussions that followed their meetings during the preparation of this book. 292 The Return of the Deficit What economists advocate is a change in the behavior of both citizens and politicians. Indeed, most of them highlight the mistakes in the macroeconomic governance and propose necessary actions to curb the current pessimism. It is clear that we have to improve the efficiency and equity of public interventions and, obviously, of the taxes and other levies needed to finance them. The problem of efficiency and effectiveness of the public sector is not studied sufficiently and even though this monograph raises this question, it does not provide concrete answers. The question of equity and in particular intergenerational equity is also insufficiently discussed even though it is well-known that younger generations will have to carry the burden of the reconstruction of the economic and financial systems in addition to moving towards a more sustainable development that has become essential given the energy crisis. The authors of the chapters of this book are all high level professionals and some of them have very important political and monetary responsibilities . They clearly point out that it is not possible to compare the decade studied in the book with the previous years. Belgium has changed its paradigm: as a small open economy in the Euro zone, it has lost control over many of its economic instruments, in particular the exchange rate. Furthermore, being in an institutional federal transformation, it faces the setbacks of world financial shocks and of the lack of governance of banking institutions. It is inexorably dragged in the existential difficulties of the Euro zone. According to Herman Van Rompuy, Belgium has become “too small”, especially to be able to host large financial institutions. Too small to act on economic policy instruments, the difficulty of its action rests mainly on preserving its competitiveness on the real economy which means monitoring the evolution of wages and prices which [52.205.218.160] Project MUSE (2024-03-19 10:28 GMT) Conclusion 293 leads to lively debates. A modification of the taxation system, a fiscal “devaluation” limiting the burden on labor compensated by VAT and capital income taxes have to be thoroughly studied. The increases of health expenditures and spending related to the needs of the elderly induced by major demographic changes and the lengthening of the life-span is often put forward to justify a reduction of other public expenditures. The problems faced by the international financial sector and the lack of a satisfactory governance of the Euro has also pointed out that the assumption of rationality of markets, the keystone of the European construction, is questionable. Indeed markets cannot handle targeted programs; economies cannot rely on autopilot. The criticisms raised by the economists of the National Bank of Belgium highlight to what extent “sound fiscal rules to reduce budgetary imbalances that existed at the start of the Euro area...