Behind the scenes of Belgian Prime News
Debate and exchange views
In Belgian Prime News, the term prime refers to primary dealers in government bonds, who are the main participants at these meetings. These primary dealers are important counterparties for the Debt Agency, which is itself in charge of managing the federal government debt. And it is no small debt as it amounted to no less than €453 billion in 2021. It is financed by instruments like OLOs or Treasury Certificates. In issuing these instruments, the Agency draws on the expertise of financial institutions which help it to place government bonds and treasury certificates with domestic or foreign investors. There are currently 13 primary dealers. Among them, there are some Belgian household names like KBC Bank and BNP Paribas Fortis, as well as a few foreign investment banks such as Barclays and J.P. Morgan.
This quarterly meeting is an ideal opportunity for those involved to exchange their viewpoints on the wider economic and financial context in which the government bond markets operate, that otherwise everybody would perceive and analyse from their own point of view. These regular contacts also prove to be enriching for all those sitting around the table.
Not as easy as pie
So, what exactly does an agenda for this kind of meeting look like? By way of introduction, one of the primary dealers outlines the international economic context. Then, Jean Deboutte, Director at the Debt Agency, gives an overview of the specific situation on the Belgian government bond market. Each year, at the first meeting of the year in March, he presents the funding plan and debt management strategy for the coming year. Then, one of the National Bank of Belgium’s colleagues or a Belgian primary dealer economist will talk about a topical issue regarding the Belgian economy, the entire debate of course being interspersed by exchanges of views and questions. From the Bank’s point of view, this first-hand market intelligence is very useful, just as foreign participants get extra information about our economy.
Expert meetings
Chief economists of private banks, National Bank of Belgium experts … These meetings bring together a wide range of expertise in the economic field. There are often new faces and we sometimes get to see former participants in new jobs. Laurence Boone took part in Belgian Prime News meetings when she was working for Barclays between 2006 and 2010. In 2018, she was the OECD’s chief economist and, a few weeks ago, took up the job of French Secretary of State for European Affairs.
Once a year, Pierre Wunsch, the National Bank of Belgium’s Governor, also joins in the discussions. He gives his opinion on the latest economic policy issues while, at the same time, these meetings help him to get an idea of what the commercial banks’ economists think about the economy.
Belgium and Europe
The meeting also provides material for the Belgian Prime News online publication, which appears around two weeks after the primary dealers’ meeting, around the end of each quarter. A publication that is now in its 97th edition. Not only useful for professional investors when it comes to Belgian public debt management, but also an up-to-date source of information (for rating agencies, international institutions or the press, etc.) on the economic situation in Belgium, from an angle that is more geared to conjunctural as well as structural developments.
Every participant gives a forecast for key economic indicators, such as GDP growth, inflation, the budget deficit and the public debt ratio.
In practice, every Belgian Prime News participant gives the National Bank a forecast for certain key economic indicators, such as GDP growth, inflation, the budget deficit and the public debt ratio. Their projections concern both the Belgian economy and that of the euro area, not only for the current year, but also for the following two years. On the basis of all these contributions, a consensus forecast is established and this is included in the publication. In this way, readers can easily get an idea of how professional forecasters see the Belgian and European economies moving in the future. More recently, detailed underlying data have been made available in the form of an Excel appendix on the NBB’s website. Food for thought for those who want to delve deeper into the subject.
Great uncertainty
The forecasts provided by participants in September reveal a deterioration of their assessment of the economic situation compared to June. For both Belgium and the euro area, growth has been revised downwards for the next year, while inflation has been revised upwards. Compared to the euro area, Belgian economic growth is expected to hold up better in 2023 and inflation should be lower. The Belgian inflation rate is expected to come down from 9.2% this year to 4.8% next year and to 2% in 2024. The euro area inflation rate, which sets the course of monetary policy, is also projected to fall from its record level of 8.2% on average in 2022 to 2.1% in 2024. The uncertainty surrounding these forecasts is high. By way of example, the euro area economy is expected to shrink by 0.1 % next year, but this average conceals a wide range of forecasts with the most pessimistic participant expecting a 2.2% contraction and the most optimistic participant banking on growth of 1.1%.
You can find out more in the latest issue of Belgian Prime News!
