Scope Ratings reviews its ratings either yearly, or every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.

Scope performs monitoring reviews to determine whether outstanding ratings remains proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for the Kingdom of Belgium (AA/Negative; S-1+/Stable) on 29 July 2020. This monitoring note does not constitute a rating action nor indicates the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated rating history can be found on www.scoperatings.com.

Key rating factors

Belgium’s AA/Negative ratings are supported by a wealthy and diversified economy, a favourable debt profile and market access, macroeconomic stability, and a strong external position. However, these supportive factors are counterbalanced by the challenges of increasing fiscal slippage, high and increasing public debt levels and weakening economic prospects. In Belgium, direct fiscal support to mitigate the Covid-19 health crisis is among the lowest in the EU, while liquidity support measures soften the expected economic contraction. The Negative Outlook reflects Scope’s view that the risks to the ratings are tilted to the downside over the next 12 to 18 months. The ratings could be downgraded if: i) policy inertia weakens public finances further; ii) productivity growth remains negative due to a lack of structural reform; and/or iii) the external position deteriorates further. Conversely, the Outlook could be revised back to Stable if: i) a return to fiscal consolidation places the public debt-to-GDP ratio on a steady downward path; ii) potential growth increases on the back of structural reforms; and/or iii) the economy benefits from a significant recovery in external demand.

The methodology applicable for the reviewed ratings and/or rating Outlooks (Public Finance Sovereign Ratings, 21 April 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst Bernhard Bartels, Director

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