Fitch Ratings-London-23 May 2011: Fitch Ratings has revised Belgium's rating Outlook to Negative from Stable and affirmed its Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'AA+'. Fitch has simultaneously affirmed Belgium's Short-term rating of 'F1+' and Country Ceiling of 'AAA'.

"The Negative Outlook reflects Fitch's concerns over the pace of structural reform in the coming years and the ability to accelerate fiscal consolidation without a resolution to the constitutional crisis," says Douglas Renwick, Director in Fitch's Sovereign group. "However, despite the ongoing political dispute, day-to-day fiscal management has remained strong, in keeping with Belgium's high-grade rating."

In Fitch's view, without political agreement over constitutional reform, it will be difficult to achieve a balanced budget at general government level as laid out in Belgium's Stability Programme. This would require budgetary surplus at lower levels of government and/or significant social security reform, either of which would likely become entangled in Belgium's linguistic-community dispute. 

Sustained debt reduction will require fiscal reform as well as fiscal discipline over the coming years, which in turn requires a new government with a fresh mandate.