Dec. 6 (Bloomberg) -- Belgium’s first full-time government in over 18 months will take office today, with Prime Minister Elio Di Rupo pledging budget cuts to prevent the country from becoming a casualty of the European debt crisis.
Di Rupo, 60, will become the first native French speaker to lead trilingual Belgium since the 1970s. The Finance Ministry was put in the hands of Steven Vanackere, the caretaker foreign minister, who will succeed Didier Reynders.
“The king held an audience this evening at Chateau Belvedere with Mr. Elio Di Rupo, in charge of forming the government, and named him prime minister,” King Albert II said in a statement. The king will swear in Di Rupo and his Cabinet at 3 p.m. in Brussels.
Elections in June 2010 yielded a power struggle between the richer Dutch and industrially depressed French region, a stalemate that was only broken when a cut in Belgium’s credit rating and surging borrowing costs forced the feuding political elite to compromise.
The six-party government faces the immediate task of enacting a pledged 11.3 billion euros ($15 billion) in spending cuts and tax increases to pare the deficit to 2.8 percent of gross domestic product in 2012 as demanded by the European Union.
A Nov. 25 decision by Standard & Poor’s to cut Belgium’s credit rating by one step to AA triggered the final push to overcome the political inertia. At their peak on that day, 10- year bond yields reached 5.86 percent, the highest at the end of a trading day in 11 years, and Belgium’s extra borrowing rates over German levels hit 360 basis points.
Ten-year bonds now yield 4.34 percent, with the spread over German bonds down to 213 basis points. Still, the extra yield, a measure of the risk of financing Belgium’s debt, compares with 79 basis points on election day, June 13, 2010.
Belgium, the product of an 1830 revolution against Dutch rule, is split between an economically robust Dutch-speaking northern region and a French-speaking south blighted by industrial decay. A small German-speaking region in the east is the legacy of World War I.
Belgium had gone through eight attempts to mediate the deadlock since a separatist party headed by Bart De Wever emerged from the election as the dominant force in the northern region, Flanders. The politicking pitted De Wever against Di Rupo, the son of Italian immigrant coal miners known for his trademark bowties in red Socialist colors.
It took one final all-night bargaining session for the six parties -- representing the French and Dutch-speaking wings of the Socialists, Liberals and Conservatives -- to divvy up the Cabinet positions.
The new finance minister, Dutch-speaking Vanackere, 47, worked as a bank clerk before entering politics. His climb up the ladder included stints as manager of the Brussels port and transport authority. In 2009 he became foreign minister in the caretaker government headed by Yves Leterme.
Vanackere will swap jobs with Didier Reynders, a French speaker who served as finance minister for 12 years. Reynders, 53, will serve as foreign, European affairs and trade minister.
--Editors: Alan Crawford, Kevin Costelloe
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