BRUSSELS, MAY 28, 1948.

A new report by the Ministry of Finance has arrived. It has amply detailed a series of issues in the Belgian economy that must be addressed immediately. Not only is unemployment increasing – with the total unemployed this year being estimated at 97,800 –, but the inflation rate seems to be increasing as well. An economist within the Ministry has pointed out that the root of inflation appears to be a lack of consumer goods; and speculation within the financial sector. Meanwhile, the root of unemployment appears to be the failure of output to meet effective demand and an increase in the labor force. This final part is worrying for the Spaak government, as legislation is being prepared to be presented to Parliament in June to liberalize a series of sectors for women participation.

Nonetheless, it appears that the main problems of the Belgian economy to be addressed appear to be:

• An increasing inflation rate due to lack of consumer goods and speculation;
• Increase in unemployment due to lack of effective demand and the inability of output to meet it;
• Lack of investments in a series of areas, including agriculture, production of textiles, glassmaking, leather goods, and overall consumer goods;
• Lack of modernization investments in tar distillation; electric power industries; agriculture; housing; and public works.

Some of the praises in the economic report regarding the economy include:

• An increase – albeit still insufficient – in investments in housing;
• Modernization investments in wide sectors of the economy through the SNCD, with other investments being done in social housing as well, for instance.
• Implementation of a center directed towards new technological developments.

In conclusion, there remains a lot to be done and the government knows that it must broaden its projects, lest the PSB/BSP lose the 1949 elections. Therefore, Prime Minister Spaak has decided to launch a large cabinet meeting with the Minister of Finance, the Minister of Foreign Commerce, and the Minister of Reconstruction and Economic Coordination.

The Spaak-Eyskens Economic Project

The Spaak-Eyskens Economic Project (PE-SE) is a combination of projects that will be undertaken in Belgium in 1948, predicted to occur until 1954 as part of a wider economic reconstruction and competitivity program. The measures developed through a series of cabinet meetings between the PSC/CVP and the PSB/BSP were the following, to be further elaborated below:

• The creation of a work group within the Ministry of Foreign Commerce to develop trimestral reports on price fluctuations and balance of trade, pointing out recommendations on where exports could be encouraged;
• The creation of a joint program between the Ministry of Finance and the National Society for Credit Towards Development (SNCD) dedicated to the modernization of Belgian industries;

The Trade Analysis and Export Promotion Committee

The Trade Analysis and Export Promotion Committee (CDCPE/CHE), also referred to as the Debruyne Commission, will be a work group under the jurisdiction of the Ministry of Foreign Affairs. This committee will be overseen by a technical expert, specifically an experienced civil servant that already operates within the Ministry, that is appointed by the King upon recommendations made jointly between the Minister of Foreign Commerce and the Prime Minister. In this case, the Min. of Foreign Commerce has already decided upon its first, and hopefully only, commissioner, Damien Debruyne.

The main objective of the Debruyne Commission will be to conduct analyses of price fluctuations and balance of trade in both consumer and industrial goods produced in Belgium and its colonies every trimester. The commission will also provide recommendations alongside each report regarding potential areas for investment, investigation, and promotion. All of this has the purpose of gathering accurate and reliable data to improve the analytical abilities of our ministries, enabling more efficient collaboration and decision-making in investment-related matters.

The Debruyne Commission is planned to operate from July 1948 to January 1949. There will also be a transitional period from January 1-30, 1949, due to the IBRI’s inauguration. This period will be comprised of compiling, standardizing, and transmitting all relevant collected data into report packages to be sent to the IBRI, which will then take up the functions of this work group.

The National Modernization Program

The National Modernization Program (PNM) is a joint program of the Ministry of Finance (MOF) and the National Society for Credit Towards Development (SNCD). This program is directed towards modernizing and improving our national quality standards, infrastructure, and technological progress of Belgian companies with the intent of maximizing our efficiency, output, and quality, while, at the same time, reducing prices. This program, although directed towards all sectors, have priority clauses dedicated to developing the following: Agriculture; textile production; glassmaking; leather goods; simple consumer goods such as furniture; tar distillation and electric power industries. All of these measures have the objective of making our goods cheaper for internal consumption – therefore reducing the pace of inflation or outright provoking minor deflation – and exportation.

With those prerogatives and objectives in mind, the MOF has decided to implement a total funding of US$8,250,000.00 for the program per year, to be adjusted according to the inflation rate. It will function from 1949 until 1954, with a test period in 1948, where we hope to see good results from this first wave of experiments.

Funding for this project will occur based on three annual periods: from January to April; May to August; and September to December. During these months, the government will release the investments and begin talks with the enterprises that will receive the funding. The objective of the talks is to ensure that the investments are being appropriately directed. The experimental period of 1948 will be from September-December, totaling around US$2,750,000.00.

The project also has a series of guidelines in order for companies to continue to be eligible for funding. After a company enters the program, it has until the end of the given year to follow these guidelines:

Within these guidelines, a company is eligible to receive a financial bonus of up to 8.25% of the total subsidy received if they have overperformed their output by a minimum of 2.00%. The higher the overperformance, the higher the bonus available.

To conclude, the program has a set distribution of funds that a company must perform after it has received the subsidies. During a fiscal year, the subsidies must be directed as follows:

• 48.00% to the acquisition of modern machinery and technology;
• 22.00% to the implementation of employee training and education;
• 15.00% to the improvement, modernization, and implementation of infrastructure;
• 15.00% to the implementation of stringent quality control and standards according to government-mandated lists.

SUMMARY

To summarize, the Belgian government is reviewing its priorities and turning towards modernizing the technology, infrastructure, and overall quality of its enterprises and their products to increase competitivity. It is doing so through a joint plan developed by the Prime Minister and the Minister of Finance which encompasses two financial projects.

• The government has created the Trade Analysis and Export Promotion Committee, from Jul. 1948 to Jan. 1949, with the purpose of analyzing price fluctuations, drafting recommendations, and providing sufficient data for government organs to increase their efficiency.

• The government has created the National Modernization Program, directed towards modernizing and improving national quality standards, infrastructure, and technological progress of Belgian companies. It prioritizes the sectors of agriculture, textile production, glassmaking, leather goods, simple consumer goods such as furniture production, tar distillation, and electric power industries.

• The National Modernization Program will be undertaken from 1949 to 1954 with a test period in 1948. Annual funding will be of US$8.25 million. For 1948, the funding is US$2.75 million.

• The National Modernization Program has stringent output increase requirements, as well as reviews and constant dialogue with Belgian companies. There is a bonus of up to 8.25% in funds if the company overperforms at least 2.00% above the requirement. The higher the overperformance, the higher the bonus available.

• The subsidy breakdown is: 48% directed to the acquisition of modern machinery and technology; 22% directed to the implementation of employee training and education; 15% to the improvement, modernization, and implementation of infrastructure; and 15% towards implementing better quality control and standards.