Direct debt refers to the debts that the Flemish administration has incurred in order to cover a net borrowing requirement. This means if the net financing requirements are negative, the Flemish administration has to borrow in order to be able to pay all its expenses. Direct debt can also be incurred because the Flemish administration takes over the debt of a third party and explicitly recognizes this, through a decree, as its own, direct debt. Finally direct debt can also exist because the Flemish administration borrows for the consolidated public institutions. Since June 2015 the Flemish Community centralized the borrowing for some public institutions (social housing companies), which in the past issued their own debt with the guarantee of the Flemish Community.
In 2015 the direct debt decreased due to the repayment by KBC of his outstanding debt of 3 billion euro, which it received from the Flemish Community as part of the support scheme for the Belgian financial sector in 2009. With this repayment the Flemish Community was able to decrease the negative current account. At the end of 2015 the current account and short term investments were positive for an amount of 1,440.75 million euro. In 2015 the Flemish Community used its Belgian Commercial Paper (BCP) programme as it was able to issue short term debt at a (limited) negative interest rate.
At the end of 2016, the direct debt was 4.674,67 million euro, an increase of 500 million euro. As shown in the pie chart below, the financing through the EMTN program remained stable, being 76% in 2016 compared to 78% in 2015.
Besides the financing through the EMTN program, the Flemish Community issued also Belgian Commercial Paper for the amount of 250 million euro and issued for the first time Schuldschein for a limited amount of 37.5 million euro.
Furthermore the Flemish Community negotiated very favorable terms for the new cashier contract at the beginning of 2016. Therefore the current account was a frequently used short term finance instrument in 2016 and had a slightly negative balance of 722 million euro at the end of 2016.
More information about the direct debt can be found in the Cash & Debt Report