Warning of possible Brussels government 'shutdown' next year

Brussels budget minister Dirk De Smedt (Open VLD) has warned that a shutdown of public services next spring cannot be ruled out due to budget constraints, while Open VLD chairman Frédéric De Gucht went as far as to say a shutdown in April or May "will be a fact".

De Smedt emphasised that the government is doing everything in its power to "safeguard financing and liquidity resources", but an analysis from the minister shows money could run out completely in April or May 2026.

Though De Smedt did not want to comment on specific scenarios, he explained to Bruzz that April is when regional grants are paid to the municipalities and holiday pay is paid to regional civil servants in May, but the bulk of tax revenues do not come in until September, leaving a gap.

It is unlikely that Brussels would stop paying its civil servants in an emergency scenario, but that means the money will have to be found elsewhere: first for interest on debt, then staff, then subsidies.

“The 19 municipalities and the same number of CPASs, as well as the six police zones, are also facing a 2% increase in expenditure on top of their already very high wage costs – are there funds available for this?” asked VUB professor Herman Matthijs, who specialises in public finance.

“It’s important to realise that shutdowns are not without precedent,” said economist Ivan Van de Cloot of the Itinera thinktank.

“In the 1990s, Liège reached a state of quasi-bankruptcy, with the payment of wages to city employees being postponed. That was not so long ago, but in Brussels people act as if they can no longer imagine such a thing.”

Van de Cloot theorises that many civil servants may now be asking themselves whether the Brussels government is still a good employer.

“Take the water company Vivaqua, for example: every year, the accounts are in deficit and the region has to make up the shortfall for pension costs,” said Van de Cloot.

“Is that sustainable? When it comes down to it, as a minister, I would rather continue to pay the wages and cut those costs.”

Van de Cloot also noted that the budget minister could leverage the risk of a shutdown to incite action.

“If you stop paying refuse collectors and they go on strike, the rubbish will start to pile up, which is a very visible problem. That might finally wake people up,” he said.

There were also concerns about the financial situation of the Joint Community Commission (Cocom), which is responsible for child benefits in Brussels, among other things.

While some savings have already been made there, minister Bernard Clerfayt (Défi) said the reserves were largely depleted and that problems may arise in 2026.

But spokesperson Zeynep Balci says Cocom is financially sound: “Moreover, we mainly receive federal money. There are no problems with payments.”

Professor Matthijs believes the decision by Dutch bank ING on its cash credit facility – a kind of buffer for unexpected liquidity problems – will be the deciding factor in potential shutdown, after Belfius previously announced it would close its €500 million credit line for the capital and that it will no longer be the Brussels region's main banker.

There is a second line from ING for the same amount, but it will not be clear until January whether that will remain in place.

“It will depend on ING, but if they pull out, it’s over – we will feel the impact very quickly,” said Matthijs.

“In January, the first wave of unemployed people who lose their benefits will arrive at the CPASs, but they have no money.

"They’ll call the municipalities, but they’re also broke and will in turn call minister-president Rudi Vervoort (PS), who also has no money.

"He will then have to go to prime-minister Bart De Wever (N-VA), which will once again raise the spectre of federal receivership."

Matthijs conceded that cutting off the credit line would be a logical choice for the bank, given the region’s budgetary situation, but said the capital could yet convince this lender to extend the funding.

“The region could offer part of its real estate as collateral,” Matthijs suggested.

“That does mean that those buildings would have to be handed over in the event of default. This happens every day in the private sector, but for Brussels it is, of course, a doomsday scenario.”

Public finance expert Maxime Fontaine (ULB) does not expect it to come to that.

“There’s an important distinction between cashflow problems and financing problems: the first is when you look in your wallet and say: ‘damn, I've got nothing left’. Then you go to the bank, and if you can't get anything there either, you're talking about a financing problem, which is a lot worse,” Fontaine said.

“Brussels can still borrow money on the financial markets - even on better terms than Wallonia. We can discuss whether this is sustainable in the long term, but that’s a different dilemma from actually having an empty treasury. It's only November, so why shouldn't it be possible to borrow more by April?”

Fontaine also questioned the importance of the Belfius cash credit that has been lost: “That money has never been used before. Why should we suddenly not be able to do without it now? I see no reason why there should suddenly be a shutdown.”

But De Gucht and others say that, come April, choices will have to be made about what will be paid and in what order.

“A number of people, services and organisations will be left without money,” De Gucht warned, pointing to political fighting as the cause of all the uncertainty.