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["The current recovery is an opportunity to strengthen the resilience and growth\npotential of the Belgian economy. The government's ability to deal with future shocks will depend\non whether it implements the right policies now while the economy continues to recover.\n\n\uf0b7   First, with public debt above 100 percent of GDP and only starting to come down, Belgium still\n    has a long way to go to rebuild buffers and achieve a more sustainable fiscal position. This will\n    require following through on plans to gradually move toward structural balance.\n\n\uf0b7   Second, with real GDP growth projected at only around 1½ percent for the foreseeable future,\n    further labor and product market reforms are needed to increase productivity growth, raise\n    potential output, and integrate vulnerable groups into the labor market.\n\n\uf0b7   Third, although the financial sector has recovered since the crisis and is generally sound, cyclical\n    vulnerabilities are rising and new challenges are emerging, suggesting the need for vigilance\n    and proactive policies.3", "The government agreed last summer on a new package of measures related to\ntaxation, the labor market, and social benefits (Table 2 and Box 1). The most notable reform was\na reduction in Belgium's corporate income tax (CIT) rate from 34 percent to 25 percent, to be\nphased in over the next three years (SMEs will benefit from a reduced rate of 20 percent starting in\n2018). To compensate for the resulting revenue loss, the notional interest rate deduction (NID) was\nmodified to apply only to incremental corporate equity rather than to the total stock, and new anti-\ntax avoidance measures were introduced consistent with Belgium's EU obligations.4 Together, the\nmeasures are designed to enhance Belgium's competitiveness while preserving revenue neutrality.", "Policy discussions focused on the importance of maintaining the reform momentum\nand not yielding to complacency. Achieving the balanced budget goal will require efforts at all\nlevels of government to make spending more efficient and safeguard revenues (Section A).\nA combination of policies and reforms could help raise productivity growth, including increasing\ninvestment in infrastructure and enhancing competition in services (Section B). To fully realize\nBelgium's employment potential, it will be critical to address the severe fragmentation of the labor\nmarket (Section C). To preserve financial stability, the authorities should address vulnerabilities in the\nmortgage market and carefully navigate the transition toward a European Banking Union (Section D).\n\n\n\n\n3\n A comprehensive assessment of Belgium's financial sector took place in 2017 under the Financial Sector\nAssessment Program (FSAP).\n4\n  The NID aims to neutralize the CIT treatment of debt and equity by supplementing the deductibility of interest with\na deduction that is the product of corporate equity and a notional interest rate.\n\n\n8"]