Over the past few years, the institutional landscape for the Flemish budget has undergone drastic changes, which will continue to have an impact on the years to come. Firstly, there are the new European budgetary rules that were created in the aftermath of the 2008 financial crisis. More stringent rules were adopted and European macroeconomic surveillance and coordination procedures were extended. Secondly, there is the Sixth State Reform, which brings substantial changes to the Flemish budgetary landscape. The size of the Flemish budget has grown substantially; in addition, Flanders has gained a large increase in tax autonomy.
Despite these changes, the Flemish Government has worked hard to reduce its deficit: in 2016, the annual deficit was limited to 127 million euro. In 2017 and 2018 the Parliament voted a budget in balance. However the realisation figures were much better with a budget surplus of 507 million euro for 2017 and 367 million euro for 2018. For 2019 the Parliament voted a budget surplus of 154 million euro. According to the first preliminary figures the result is again better with 276 million euro. 2020, on the other hand, will be a more difficult year for the budget with an estimated deficit of 431 million euro. This is without taken into account COVID-19.
In the following pages you will find the highlights of the revenues and expenditures for this 2019 and 2020 budget outline.
The Issuer is exposed to the impact of the global pandemic resulting from the outbreak of a strain of novel coronavirus disease, COVID-19, as declared by the World Health Organization on 11 March 2020. Governments in affected areas have imposed a number of measures designed to contain the outbreak, including business closures, travel restrictions, quarantines and cancellations of gatherings and events. The spread of COVID-19 may result in a global economic downturn, including in the Eurozone, Belgium and the Flemish region, and is causing and may continue to cause in the future increased volatility and declines in financial markets. In particular, the spread of COVID-19 is likely to lead to a decrease in tax and other revenues of the Issuer and to an increase of its expenses. Such consequences cannot be precisely determined at this date. If the pandemic is prolonged, or further diseases emerge that give rise to similar effects, the adverse impact on the global economy could be deepened and result in further declines in financial markets and impact on the Issuer.