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LONDON — Fitch Ratings agency on Monday cut the outlook for Belgium's government bonds, citing the risk that political disagreements over the creation of a new government could hurt the country's drive to lower debt.
Fitch affirmed the country's AA+ rating, but the negative outlook means there is a chance it could be downgraded in coming months.
The outlook cut reflects "concerns over the pace of structural reform in the coming years and the ability to accelerate fiscal consolidation without a resolution to the constitutional crisis," said Douglas Renwick, director in Fitch's sovereign group.
Belgium has been without a government for almost a year due to a standoff between Dutch-speaking and French-speaking parties.
The insistence on more self-rule in Dutch-speaking Flanders has been at the heart of the political stalemate that has shaken the country of 6 million Flemings and 5 million Francophones to its roots, and even prompted some to contemplate for the first time the end of the nation.
Flanders, the Dutch-speaking part of the country, is richer, and it has increasingly demanded more autonomy, while French-speaking Walloon politicians want to hang on to as many national institutions as possible for the financial well-being of their region.
Fitch said that without a political agreement it will be difficult to achieved a balanced government budget, though the rating remains strong because the country has an advanced, diversified economy and high domestic savings.
