Belgian parties near deal to create government

AP News
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Posted: Nov 26, 2011 8:03 AM
Belgian parties near deal to create government

Political negotiators in Belgium, stung into action by a credit downgrade, agreed Saturday on budgets for the next three years, clearing the way for the country to get a permanent government in the coming days.

Belgium has had only a caretaker government since June 13, 2010, as a series of negotiators tried and failed to bridge the divide between the country's 6.5 million Dutch-speakers and its 4.5 million French-speakers. But the talks were given much greater urgency late Friday when Standard & Poor's downgraded Belgium's credit rating, potentially leading to increasing interest rates and a downward financial spiral.

Negotiators for six political parties hurriedly resumed their talks at 6 p.m. on Friday and continued through the night. They reached a deal around noon on Saturday.

Guillaume de Walque, a spokesman for Elio di Rupo _ the man leading the talks and the presumed new prime minister _ told The Associated Press by text message the parties have reached an agreement on the budgets for 2012, 2013 and 2014, as well as on structural reforms and labor and pension reforms.

Among the reasons Standard & Poor's cited for the credit rating downgrade was that the caretaker government lacked a mandate to implement deeper fiscal and structural reforms.

The goal had been to reach agreement before the markets opened on Monday. Di Rupo has scheduled a news conference for Sunday, presumably to get word out before Monday that Belgium has a stable government and a long-term financial plan for cutting its deficit.

The talks had focused to a large extent on how austerity measures and increased taxes should be balanced in an euro11 billion ($14.8 billion) package to keep spending within limits.

King Albert's office issued a statement saying, "the king rejoices that an agreement has been found," and adding that he had asked di Rupo to form a government as soon as possible.

But Yves Leterme, the outgoing caretaker prime minister, warned in a radio interview Saturday morning that the formation of a new government would not in itself mean market confidence would return.

"Mistrust comes galloping and trust arrives by foot," he said on VRT radio.

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Don Melvin can be reached at http://twitter.com/Don_Melvin