OECD Economic Surveys : Luxembourg 1988.

59 Pages·2.428 MB·English

by  OECD

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ECONOMIC SURVEYS
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BELGIUM
LUXEMBOURG
ORGANISATION FORECONOMIC CO-OPERATIONAND DEVELOPMENT
Pursuanttoarticle J oftheConventionsignedinParison 14th December,
1960,andwhichcameintoforceon30thSeptember, 1961,theOrganisation
for Economic Co-operation and Development (OECD) shall promote
policies designed:
- toachievethe highestsustainableeconomicgrowthandemployment
andarisingstandardoflivinginMembercountries,whilemaintaining
financial stability, and thus to contribute to the development ofthe
world economy;
- to contribute to sound economic expansion in Member as well as
non-membercountries in the process ofeconomicdevelopment; and
- to contribute to the expansion of world trade on a multilateral,
non-discriminatory basis in accordance with international obliga¬
tions.
The original Member countries of the OECD are Austria, Belgium,
Canada, Denmark, France, the Federal Republic of Germany, Greece,
Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal,
Spain,Sweden,Switzerland,Turkey, the United Kingdomand the United
States. The following countries became Members subsequently through
accessionatthedatesindicatedhereafter;Japan(28thApril, 1964),Finland
(28thJanuary, 1969), Australia (7thJune, 1971) and New Zealand
(29th May, 1973).
The Socialist Federal Republic ofYugoslavia takes part in some ofthe
workofthe OECD (agreement of28thOctober, 1961).
Publiéégalement en français.
©OECD, 1988
Application forpermission toreproduce ortranslate
allorpart ofthis publicationshould be madeto:
HeadofPublicationsService,OECD
2,rueAndré-Pascal, 75775 PARISCEDEX 16, France.
Contents
BELGIUM
Introduction 1 1
I. Review offive years of corrective policy 13
Mounting imbalances up to the early 1980s 14
Economic policy responses 15
Restoring the economic situation 17
Cost of the corrective programme 26
II. The fiscal consolidation effort 29
Structure of public spending and factors influencing its growth 29
The financing of public expenditure and the growth of the public
debt 37
Pressure due to the increase in the tax burden and public debt 48
Continuing need for fiscal consolidation 56
III. Economic policy, recent trends and short-term prospects 62
Fiscal policy 62
Monetary policy 65
Other aspects of economic policy 67
Recent trends and short-term prospects 67
IV. Conclusions 75
Notes 79
LUXEMBOURG
Introduction 83
I. Overall economic performance 84
Overall macroeconomic performance 84
The restructuring of the productive system 88
II. Aspects of public finance 90
The acceleration of public spending and the steel crisis 90
The accentuation of tax pressure 92
The maintenance of budgetary equilibrium 92
The recent fiscal policy stance 93
III. Recent trends and short-term prospects 95
Recent trends 95
Short-term prospects 96
Notes 98
Annexes
I. Measuring changes in the degree of rigidity of the supply of public
goods 99
II. Consumption behaviour and public indebtedness 101
III. Model of long-term interest rates estimated from time series (1975-
1986) and cross-section data for 16 OECD countries 104
IV. Chronology of main economic policy measures 109
Statistical Annex 114
Tables
Text
BELGIUM
1. Comparative macroeconomic performance 13
2. Wages and unit labour costs 18
3. Growth of investment and capital stock in the business sector 20
4. Breakdown of national income, saving and lending capacity 21
5. BLEU balance ofpayments 25
6. Structure of public expenditure 31
7. Subsidies and transfer payments to households 32
8. Structural budget deficit excluding interest payments 33
9. Trendofrealwelfareexpenditure: demographiceffects andgenerosity
ratio 34
10. Factors in the growth of unemployment benefit in real terms 35
11. Implicit price deflator for selected categories of public expenditure 36
12. Structure of tax revenue 39
13. Average GNP elasticity of tax revenue 40
14. Marginal rate of tax on labour 40
15. Corporate tax rates and tax allowances in 1983 41
16. Transfers from central government and net lending capacity of local
authorities and the Social Security system 44
17. Financial accounts of the institutional sectors and structure of
financing ofthe central government financial deficit 45
18. Apparent interest rate on the debt and current interest rates 47
19. Fiscal multipliers and private investment 56
20. Medium-term public debt outlook 58
21. Budget forecasts 63
22. Public sector transactions 64
23. Short-term prospects 72
LUXEMBOURG
1. Structure ofoutput and employment 85
2. Labour market 86
3. Central government budget 95
4. Short-term prospects 97
Statistical annex
BELGIUM
Selected background statistics 114
A. Gross domestic product 115
B. Income and expenditure of households and private non-profit institu
tions 116
C. Income and expenditure of enterprises 117
D. Government revenue and expenditure 1 18
E. Labour market 119
F. Area breakdown of foreign trade 120
G. Commodity breakdown of foreign trade 121
H. BLEU balance of payments 122
LUXEMBOURG
Selected background statistics 123
I. Gross national product 124
J. Labour force, employment and unemployment 125
Diagrams
BELGIUM
1. Profitability indicators 19
2. Corporate income and investment 20
3. External performance 23
4. Competitiveness indicators 24
5. Labour market 27
6. Total public expenditure excluding interest payments 30
7. Total general government receipts 38
8. General government net lending 43
9. Gross public debt 46
10. Average labour "tax wedge" 49
1 1. Cost of labour relative to capital 50
12. External imbalance and interest rate differentials 53
13. Structural deficit and real long-term interest rate 55
14. Interest rates 66
15. Prices 68
16. Exchange rate against selected currencies 70
LUXEMBOURG
1. Comparative trend of GDP 84
2. Current balance of payments of Luxembourg 87
3. General government expenditure and tax revenue 91
BASIC STATISTICS BELGIUM
THELAND
Area(1000«q.km) 30.5 Mainurbanareas(1-1-1986)inhabitants:
Agriculturalarea(I000sq.km) 1985 13.9 Brussels 976536
Tillage(1000sq.km) 1985 7.2 Antwerp 918963
Liege 592732
Ghent 484299
THEPEOPLE
Population(1-1-1986),thousands 9859 Netmigration(1985) -418
Numberofinhabitantspersq.km 323.1 Totallabourforce(1986,thousands) 4212
Population,netnaturalincreaseper Totaldependantemployment 3043
1000inhabitant»in 1985 0.2 Agriculture 13
Manufacturingandconstruction 952
Other 2079
PRODUCTION
Grossnationalproduct(1986),billionsor Grossnationalproductbyorigin,atmarket %
Belgianfrancs 5148.2 prices(1985)
Grossnationalproductperhead(1986)US$ 11802 Agriculture 2.4
Grossfixedinvestment:PercentofGNP(1986) 15.7 Industry 23.8
Perhead(1986)US$ 1849 Construction 4.8
Other 69.0
THEGOVERNMENT
Currentgovernmentexpenditureongoods CompositionoftheHouseof
andservices(1986),percentageofGNP 51.0 Representatives:
Currentgovernmentrevenue(1986)percentofGNP 44.8 Socialists 34
Governmentdebt,31-12-1986,billionsof Christian-Socials 29
Belgianfrancs 5418 Liberals 23
Vdksunie 7
Others 7
Lastelections: 13.12.1987
FOREIGNTRADE
Exports: Imports:
Mainexportsin 1986percentoftotal Mainimportsin 1986,percentoftotal
exports,SITC(BLEU): imports,SITC(BLEU):
Ironandsteelproducts(67 +68) 11.7 Ironandsteelproducts(67 +68) 5.9
Chemicalproducts(5) 13.3 Chemicalproducts(5) 10.7
Machineryandapparatus(71 lo77) 11.9 Machineryandapparatus(71 to77) 15.0
Textileproducts(65) 6.1 Textileproducts(65) 3.4
Transportequipment(78+ 79) 15.7 Transportequipment(78+79) 13.7
THECURRENCY
Monetaryunit:Belgianfranc CurrencyunitsperUSS,averageofdailyfigures:
Year 1986 44.6853
December1987 34.1878
Note: Aninternationalcomparisonofcertainbaskstatisticsisgiveninanannextable.
BASIC STATISTICS LUXEMBOURG
THELAND
Area(sq.km) 2586 Majorcity,inhabitants:
Agriculturearea, 1985(sq.km) 1261 Luxembourg(April 1986) 86200
Woodland, 1985(sq.km) 885
THEPEOPLE
Population(1-1-1986) 367200 Totalemployment(1985,thousands) 161
Numberofinhabitantspersq.km 142 Agriculture 6.8
Population,netnaturalincreaseper Industry 53.6
I000inhabitantsin 1985 0.2 Services 100.6
Netmigration 1985 142 Dependentemployees 141.1
Employers,self-employedpersonsanddomestichelp 18.9
PRODUCTION
Grossdomesticproduct(1985),billionsoffrancs 241.1 Grossdomesticproductbyorigin,at
Grossdomesticproductperhead,USS(1985) 11056 marketprices(1984):
Grossfixedinvestment: Agriculture 2.4
PercentofGDP(1985) 17.7 Industry,energy 39.7
Perhead,USS(1985) 1955 Construction 5.8
Other 52.1
THEGOVERNMENT
Publicconsumption(1985),percentofGDP 11.5 CompositionoftheChamber: %
Currentgovernmentrevenue(generalgovernment) ChristianSocialParty 39.1
(1984),percentofGDP 52.6 WorkersSocialistParty 32.8
Centralgovernmentdebt,percentofGDP DemocraticParty 21.9
(December31st, 1985) 12.8 CommunistParty 3.1
Others 3.1
Lastelection: 17-6-1984
THECURRENCY
Monetaryunit:Luxembourgfranc CurrencyunitsperUSS,averageofdailyfigures:
Year 1986 44.6853
December 1987 34.1878
Note: Aninternationalcomparisonofcertainbasicstatisticsisgiveninanannextable.