RV~T NO. €.-2 '3

INTERNATIONAL BAKK FOR RECONSTRUCTION AND DEVELOPi.lI~NT

APPENDIX II TO THE PHESIDE!{T' S REPORT

OB THE BELGIAN IDAN AP~LICjI.TIOl'J

• REPORT ON T~rr~ BELGILN EC ONOMY

•

Economic Department

Prepared by: A. Stevenson ltebruary 1, 1949

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

•

•

,Area:

Population:

Far value:

BELGIUM

Selected Statistics

11,775 square miles (30,497 sq.' km.)

8;S12j195 persons (1947 census)

BF 1 :; $0.-0228167

National income in 19L.8 (current prices): BF 2ho-250 billion - U~5.5-5:7 billion)--":j6lt6-670 per head

•

•

MAP OF BELGIUM

o I

rIIlJ OVER /500'

MILES 50

«

D BELOW /500'

100 I

(;('5(1 COAL F If L 0 ~REGIONS

• . AM ~Q

UTRECHT(~ • ARNHEM

eDELFT

TABLe; OF CONTENTS

Summary and Conclusions

III Belgium's Recovery .l~fter the Har 1 • (a) Circumstances Aiding Recovery 1

(b) Government Policy 2

(c) Aspects of Economic Recovery 4

II. Problerls of Headj'ustment 11

(a.) Foreign Tra.de and Balance of Payments 11

(b) :Prices, Costs and Capital :):i'or!'!la tion 20

Statistical Appendix

"

SUi~jI11JffiY AND CONCLUSIONS --...........-..-...,..~.........--.. -----...............

1. Because of a combj.nat.ion of fortune.te circ1.lr.1stances and Govern-

ment policy, the pace of economic recovery in Belgium since the war h-:s :1:o€en e~:.

tremely rapid. In November 1948 the index of industrial production stood at

124. (1936 through 1938 average = 100). The rate of recovery has, hmlJever,

been uneven. It has been most striking in steel prC'duction, netal G8nn-

factures and the generation of electric power, least satisfactory in various

consumers' goods industries such as the production of textiles, glass and • leather goods, where the level of activity has recently .fallsn substantially

and unemployment has become serious. heconstruction has been slowoer in

agriculture than in industry but is on the whole satisfactory.

2. The surplus money, which resulted from the inflation of the first

postwar years, has now been ma'~ched by price rises so that the money supply

has remained at about the same level for over a yeo.r. This has been achieved

by a proGressive reduction of the deficit on the general budget (down to

BF 4.8 billion in the 1949 estimates), and by the tight credit : ;:,licy of the

Central Bank. Partly as a consequence of the liberal economic policy of the • Government, how'ever, the general prioe level standf- at the relatively high

level of aC/.)ut four tines the prewar figure.

3. Progress has also teen made toward the achievement of the Benelux

Economic Union but substantial differences still exist between the economic

posi ti011S and policies of the two major ~Jartners, Belgium and the Nether-

lanuo. A strenuous effort will be required if economic union is to be at-

tained, as scheduled, by January 1, 1950.

4. Although the postwa.r increase and recent steadiness of its gold

holdings are indicative of the comparat~ve strength of Belgium's external

•

•

ii

financial position, the balance of payments shows ceJ'.'tain vfeaknesses. To a

large extent :Belgium has been covering its deficit with the ~{estern Herilis­

phere with gold and dollars obtained from other countries, notably in :~H.l'Ore,

and maintaining its exports by granting substantial net crl.3di-ts on paYl:lent

agreement accounts.

It has become increasingly clear that equilibrium in intra-E~ .... ropean

trade cannot be restored quickly, that other countries cannot contim.l6 to

finance Belgium's dollar deficit by payments from dwindling monetary reserves)

and that Belgium is not in a position to grant large additional net credits

vd.thout ri.lnning the risk of further inflation. To cope with these p~oblems~

the OEEC Intra-European Payments Plan has been developedl linking dollar

allocations with provisions for financing intra-European trade. If this

system functions as is hoped and is continued in some suitable form for the

remainder of the ERP period, it should prove a considerable aid to Belgium

in the attairuaent of equilibrium in the Belgian balance of payments with

other participating countries •

S'Q,ch an equilibrium does not necessarily mean that Belgian receipts

from and payment3 to Europe will balance exactly. EVen alloY:ing for in­

crea.sed exports to and pe'rhaps reduced imports from the Western Hemisphr3re,

Bel~ium will in the long-run probably still have a deficit with the Western

Hemisphere a.nd some - though reduced - surplus lJ'rith ~urope. Thus j.ts abilit:r

to meet its dollar payments wj.ll again depend on its ability to earn dolla.rs

through surpluses with other areas incl\lding Europe. 'rhis is the major risk

involved in a dollar loan to Belgium,

It is a l?isk which is, of course, cemm -. to many other European coun-

tries and, furthermore, the long-run outlook for the Belgian balance of

••

•

iii.

payments is brighter than for most in sev.eral respects. Al though its net in­

come from transit trade is not likely to recover fully to the prev.rar level,

Belgium has not, like the United Kingdom or The Netherlands, been forced to

liquidate a large portion of its foreign investments. Neither has it ac­

cumulated large foreit;"t1 debts like the United Kingdom, '1'he Netherlands or

France. In particular its U.S. and C&.nadian dollar payments on account of

interest and amortization are not very heavy. Assuming that LOA loans con­

t.inue, though on a reduced scale, it is estimated that these payments will

average less than ~p20 million in the 10 year s following the end of T~RP com­

pared, fo:;. example, with well over $40 ;nillion for The l'Jetherlands. Belgi'..lm

V\rill, like other European countries, suffer from the partial loss of Ge~many

both as a market and a supplier, but it will not be so severely affected as

The Netherlands. Finally, its position in the Congo is secure, unlike that

of the Dutch in the Indies. Thus the structural adjustments required in the

Belgian balance of payments are smaller than i!l the case of many countries in

\vestern Europe while Belgi1lJ'U is in a relatively strong position to make them •

5. Thoubh Belgium's foreign trade problem is not all of its own

naking, it can contrtbute to the solution of it by lowering costs and pric-3s

and thus improving 'its competitive position against the approaching daY:'Jhen

the vrorldwide shortage of goods comes to an end. For the present, the most

promising r.1ethod of reducing costs is by modernizing equipment, in other

words, by increased investment. The information available does not permitl a

defini te conclusion on the problem of v\rhether and to what extent the Belgian

economy has suffered from under-investment since the war. Statistic~l data

indicate that actual investment in 19h7 fell beloy! a level v.rhich the 1J.3lgian

Government nonsidered sati$factory by about BF 8 billion, the greatest ;,:' .:,1 ;.

•

, •

iv

discrepancy being in the coal, steel, tar distillation and electric pO'wer in­

dustries, and in agriculture, housing and public works.

The domestic capital market is unable to meet the demand for funds

on the scale required to fill a gap of this magnitude, The Belgian Treasury

is still chronically short of cash, and since the overall budget for 19;-~9

provides for a deficit of almost BF 5 billion, savings of the state cannot

be expected to contribute. On the other hand, some of the projects included

in the Belgian investment program might be omitted, but on balance it would

appear probable - on the basis of the lirni ted information available - that

with sOtle further calls on foreign capita.l and perhaps a further limited

amount of deficit financing a fairly satisfactory rate of capi'tal formation

can be achieved.

•

I. BELGIU}JI'S RECOVERY AFTER TI::C :.;JtR

Because of a combination of fortunate circmnstanC8s ~1d govern-

ment policy, the pace of economic recovery in Belgium since the war vrcs o:~-

tremely rapid.

(a) Circumstances Aiding Recovery

Belgian material war losses, officially estimated at about ::3? 150

billion in terms of 1939 prices, were light compared, for eX81nple , with

those of the Netherlands. Besides, more than half was composed of clearing

balances with other enemy ... held areas, occupation costs, requisitioning of

stocks and similar charges. The:re had also been damage to persons and IT op-

erty, but 1i ttle dislocation had ocourred in the labor force, "the tran.s­

portation systend/ or the tools of prodl.lction. The ta.sk of reconverting

Belgium's industrial machine to peacetime production was therefcre co41-

paratively easy.

Equally' i.mportant to the country's economic recovery vvas its

strong gold and foreign exchange position. BelgiUITl's gold stock was re-

st.ored vrithout loss after the war. Substantial interest and dividend re-

ceipts had been built up during the war from inveqtments abroad and in the

Congo and, in addition, the latter possessed reserves of foreign currency

acr'!"LUllulated from its profitable wartime trade. Furthermore, the early

J .. iberatiol1 of the country, rrith the important seaport of Antwerp in ltforking

order, made Belgirun a vital supply base :f.c~' the allied armies during the

closing months of the war, and, as a result, the country built up a Mutua.L

Aid credit equivalent to over ~:i340 million in supplying goods, services

. j

It may be noted that conqiderable reconstruction work on the trans-­portation system was "....ndertaken by the Alli~d Armies.

•

•

- 2 -

and pay for allied troops. The cOD'iparative strength of the franc also 811-

co~raged the inflow of funds from abroad.

The high degree of social stability in postwar Del~ium and of po-

litical stability in the past year have also aided economic revival. Both

in voting strength and influence the Communist Party is rather su:8.11. Al­

though differences - notably concerning th~ royal question and the granti·-6

of subsidies to Catholic schools ..,.. exist between the Christian Social P&rty

and the Socialist Party, the coali tiol! which has governed Belgium since :March

1947, these have not been sufficiently serious to threaten stable Government

and thus hinder agricultural or industrial production. Harmonious industrial

relations have also played an important part~ Strikes have occurred (for

example $ in the metal industry in June 1948), but on the whole the machinery

for reconciling differences arising between labor and management has up till

now proved effective ~n reducing labor unrest. The Governm~nt f s policy of

increasing the coverage of social security legislation and of :.;ranting cash

subsidies to t'ecQnomically weak" member$ qf the corlll1unity has also contrib­

uted to the achievement of a high degree of social pea.ce.

(b) Government Pol;icl

Th1s favorable situation has made it much easier for the Belgian

Government to carry through the liberal economic policies which were adopted.

These polici~s were directed to restoring the standard of consu,mption as

rapidly as 'possible on the theory that maximum production could be achieved

by relying on the incentive of the individual to produce and ensuring that

money incomes could be converted into real goods. vrith the pr;imary emphasis

on satisfying the demand for consumers' goods, pub~ic works e:x.pendi tures

•

,

•

- 3 -

were reduced to a minimum and a stringent credit policy pu:-:sued.

This high level of consumption was not satisfied by domest.ic r)rQ­

duction alone. The Government follow'ed a bold policy of encoura~~iDr; irrJ.po:'ts

and a large volume of consumers' goods as vlell as of foodstuffs and inC:LLS­

trial raw materials, was permitted to enter the country,.

Moneta~J stability was a necessary precondition for the success of

such a policy, however, and the war had left a Ie 0B.CY of snrplus T'lOney in

Belgium, for the mone:y· supply had expanded to over three tir:es the prewar

level while the volume of goods available was considerably smaller. Besides

keeping a '~ight control over credit it VTaS necessar.f to deal with the conse­

quences of tte wartime inflationar.y process. In September 1944, two-thirds

of the currency in circulation and bank d~posits were withdra1vn or blocked~

Of the deposits blocked, 60% Here frozen indefinitely and converted into a

forced longterm loan, the other ho% being blocked temporarily and gradually

unfrozen". In order to amortize this ,forced loan, a single 5;'6 tax was ir:l­

posed on capital values and special taxes were levied 011 wartime profits •

Subsequently, control of monetar.y eApansion was exercised by the tracitional

means of raising the discount rate (from l};s in 191+5 to 3~~',~ in .tI.Uuust. 1947),

by requiring banks to hold from 50 to 65/~ of their assets in t·he forn of

Treasury obligations, and by trying, thouGh not always succcssful:'y, to re­

duce Government expenditures in order to m~Lnir;1ize the need for irJ.'l·'1.tionary

financing. To combat undue price rises, wages were frozen, sonel')rice con­

trols and subsidies instituted - though these wel"'e alv~ays considered as a

short-run measure - and imports of consumers' goods deliberately encouraged"

•

•

- 4 -

(c) !spects of Economic RecoverJ

The considerable measure of success achieved in Belgian recoYl-

struction is evident .from available indices of industrial procluctiOlto

the middle of 1946 the general index of industrial output,.!.! although ctill

well below the level reached in the boom year 1937, had practically recovr.~red

to the level of the base period (1936-38 average), anc~ by the end 0':: 1;:L7

it was almost la% higher. Although the rate of e:X:0ansion bas slcnred in 1948,

the index of industridl production has, on the whole, continued to devolop

satisfactorily, the November figure of 124" 0 (provisional) comparing favora.bl~

with the level of 113.0 which was reached in the corresponding mont~ of the

previous yearo

Progress has, howeve:t', been uneven, and in some sectors output has

actually decreased. The recovery has been especial1:'l :rr.arked in the heavy

industries and in the ge~1eration of electrical power. In Hovembf;::;' the pro-

visional indices of steel production, metal manufactures and. electric power

production stood at 135.9, 143.6 and 162.8 (1936-38 averages = 100) and were

all well above the levels achieved in the corresponding D.onth of 1947.31

Coal production j s still I1andicapped by an inaclequCite labor force and low

productivity but the provisional figure for Novembc.;r was 2,338,000 metric

tons or almost 97% of the 1936-38 average cOl:1pared -:-,'ith 1,.710,000 tons in

November 1947. Construction has 8.1so la~l;ed SO ... 16 .hat, as ui)YG be e .. ~;)8cteu

--------------------------------------The index used is that pub1ishec: b~- ~l.~;ence ~cono:r!1i-(lue et i'~l1cL-"cit)re, which gives a significantly higher f'i:~ure tha:a t.hat of the index pub­lished by the Institute of ~cc~1omic and Social Researcl1 of the 1Jniver­sity of Louvain Q

In the metal-work:i,.ng industry-, hou6ver, nev'T orders shovre(~ ~~iJns of declining,

'.

•

- 5 -

in view of the shortage of skilled workers and of Belgium I s overall Gc')u.olJic

policy of encouraging consumption rather than investment. The weakest spot

is in the textile industry Yfhere the cOlabination of a sat uTLted dO:n.8Ctic ,

market and export difficulties has caused considerable contraction in Tec8rlt

months. In Hovember 1948 the index of textile production (natural fibers)

stood at 90.9% of the 1936-.38 average or about 257~ J.o"V~-er the.n the C')l'Te:=:-

ponding month in 1947.

As i.n most other countries, l·~~construction in agriculture l~as been

slower than in :Lndustry. In the food J8ar 1)46/47, it received a shClr'!) set-

back from the severe vrinter and the subsequent sUT,nncr drout;Lt. ~Iol'V8vGr, the

p:n:Gt1iret.;~ in 1947/48 is - much brighter. Su!;ar beet and lifheat harvests ap-

pear to be close to prewar levels 0 The wartime trl: ~r1 tovrard the production

of food crops and away from i'oduer crops is now being reversed and the nro-

duction of meat, for example, is increasing. Furthel'" progress is de)endent,

to a significant degree, on the supply of imported foodstufis. The diet of

the population in the year 1947/48, however, still appears to have been some-

what belovr the prevvar level in terms of calory '" protein and fat contcnt~

COl'robo'rative evic!ence of the countrJ's economic revival is fllrllishec

by statistics of railroad and shipping activity" but here too SumE} recent

signs of w·eakness are visible. Freight traffic on the state railroads has

reached prewar levels. The recovery has been SlOYTer on inland waten'J'ays

1fhere the volume of traffic in June 1948 \'Tas still abo-ut. 20~h below tl:at of

prewar, mainly because of the lmr level of ilJ.ternational traffic. TLe ab-

normal situation in Antvrerp, which profited froIn tb.e grc;ater destruction

at Rotterdam but was hindered by the low level of economic activity in Ger-

many and the Anglo-American policy of routing traffic through IIamburg and

I

•

•

- 6 -

Bremen, is now passing" However, Belgiurn~5 grovtfing trade difficulties have

brought new prob~ems. In the course of 1948, the volume of merche,ndise un­

loaded from ocean-going vessels has dropped steadily while that of ];.c:cc: ;:'1.1 ....

dise loaded has shown a slightly rising trend. In October the total volume

of merchandise hancUed from ocean-going vessels 'was down from the postnar

peak to around three-quarters of the prewar level, and about hO-50% of t:'.8

city's dock "workers are now idle. The recent agreement with the Bizone au­

thorities to route an increased volume of traffic through the ports of the

Low Countries should, hOTfever, allevi2.te this situation at, least in part.

The high rate of production and. iraportc:.tiol1 has 1'il180. the SllOPS

with goods. At least through the summer of 1948 t1:~e volUl.16 of retail sales

appears to have been approximately at prewar levels l:hen allo-rrance is made

for the intervening rise in prices.

The general price level, however, is ver-y high, and this rerr!ains

one of the most difficult problems with which the Belgian Government has to

deal. Although, as has been indicated above, the monetary purge dealt with

the accumulated wartirr.e inflation, the cost of maintaininG allied troops set

up a further inflationary process l?sting through 1945. Subsequently, the

trend of wor1-d prices al1ct the Del,'~ian policy of dropping price subsidies and

rationing as quickly as possible and allowing prices to find their own level

resul ted in a further i)rice rise. Since the spring of 1948, hovv8ver, both

vrholesale and retail price indices have remained fairly stable at around

four times the prevrar level. Rationing is nOH eliminaJued. :/ith tlw en(,.1. of

sugar rationing on January 1, 191+9, all rationing at tho retail level carne

to an end.

The Belgian labor force has increased frOEl 3,750,000 in 1;]6 to

•

•

- 7 -

over 4,000,000 today_ There is still a shortage of skilled workers in the

construction industry, and above all in the coal mines, where only the em-

ployment of forei.gn workers first prisoners of war and later Italians an(

displaced persons - avoided a serious si tua tion. As has alreaoy teen ir:.di-

ca ted, however, non-seasonal unemploYTllent has increased rather sL.arply in

recent months, especially in the textile, ~;lass, leather an(~ other non-

durable consumers t goods industries and amonG the Antwerp dOC].i:ers. Seasonal

unemployment is also growing rapidly, for example,in the construction in-

dustry. In the last weelc of 1948, the number of totally unemployed (185,000)

was three times as great as it 1j;as a year ago and the number of those vlhol1y

and partially unemployed re ached 317, 000 or 14;& of the insured population

and about 8% of the total labor force. Seasonal unemployment may increase

further in the coming months. The above total is also temporarily inflated

as a result of the recent dispute between the Belgian and French authorities ..

in view of France t s slH)rtage of Belgian francs - over the transfer to Bel-

gium of earnings of Belgian frontier vvorkers in France. A compromise settle-

ment has since been reached. For various reasons, notably differences of

the skj.lls required and the nature of the work -many of the unemployed. tex-

tile workers, for example, are v[ornen - and also because of cifficul ties of

housing a.nd language J it is unl~kely that many of the unemployecl can be ab­

sorbed into the industries where labor shortages are prevalent.~ The

gra'yit:r of the problem vras recognized in the Prime i:,1inister r s policy state-

ment of November 30 and in the subsequent announcement that a suppl.ementary

It is in.teresting to note that whereas Belgium intends to import 7,000 workers for the mining, metal and construction iEd.ustries by the end of 1948, negotiations have been reported to be going on between the Bri ti.sh and Belgian Governments aiming at an agreement allowing BelGian textile workers to take up employment in the United Y~ngdom.

•

•

- 8 -

budget will be introduced to alleviate the situation.

Money waees have risen substantially thou~h apparently rather 1.ess

than retail prices.. However, various benefit::;, such as family alJ.ow8 ~·.ces ,

are now received by certain groups of \yorker~. Unfortunately the publi~)hed

index of money wages is not satisfactory and no index of the ~ost of livinG

is available so that it is difficult to reach a definite conclusion on the

level of real wages. In the opinion of COl'ilpetent obsorvers, it is ~;om.el'fhat

below prewar •

Price increases appear to have completely absorbed the inflation

generated :tn the first lJostwar years. The tight credit policy of the Na-

tional Bank and 'the improving budgetary position have ~revented new pressures

from arising. For well over a year now the total money supply has remained

practically stationary. In Septeluber 1948 it amounted to BF 158.5 billion

compared with 154.3 million in the corresponding month of the previous year.

'1'he progress towarQ-s equilibrium in the GovernmE;3l1t f:i,.nances is clearly ~hown

by the stefidy reduction of deficits on the general budget, i.e., the ordil'lary:

extraor.dinary and special war budgets taken together:

Deficit on the General Budg~

1945 1946 1941 1948 1949, est,

Billion Belgian Francs

35.8 37.1 32.0 13 • .5 4.8

The public debt rose considerably during the war and its structure

has recently been,cll.anged significantly as a result of the reform of the

National Bank and the new convention between the state and the Bank. Of

state debt of BF 51 b~lliOl1 to the National Bank, BF 35 billion were

•

•

- 9 -

consolidated, the proceeds of the revaluation of the gold stock vrere usod

to reduce the Government debt to the Bapk by BF 10.5 billion, and BF 4.5

bi.llion were cancelled because notes to that value were not presented ':cr

exchange in cormection with the monetary reform leaving a balance of over

BF l billion. IJainly as a result of these changes, the consolidated debt

rose from BF 108 billion at the end of August (including J3F 40 bill:i.on of

the monetary reform loan) to BF 143 billion at the end of September. Short­

te:t,'11l debt on the contrary fell from BF 123 billion to 77 billion, ana the

tote.l public debt from BF 263 billion to 252 billion. 7bis fieure should

be compared to a national inC01(18 estimated at :OF 215 billion in 19Lr7 and

240 to 250 billion (fp5e5-5.7 billion) in 19h8. It may be !1otcd that the

relationship between total public debt and national income in Del:.:;i1..UU is

rather $imilar to that existing in the United States where total Govern-

ment debt at the end of December 1948 anounted to about f.~253 billion com­

pared 1ii th a national income of ~;224 billion for the year ~ There has been

some rise in Belgian long-term E.~xternal debt this year to, reach BF 13 billion

at:tre end of September, but it is still equal to less than 5j& of the total

public de bt •

Despite its liberal import policy, Belgium1s external financial

position has remained strong. The 'BOld and foreign exchange holdings of

the National Bank amounted to the equivalent of ~~931 million at the end of

November 1948 and were almost exa.ctly at the level of September 1947 just

after the end of the period of sterlin[; convertibility. Gold holdin;Js,

Vfhich had dropped from $735 million at the end of 19L.6 to f ,578 ttillion in

February 1948, had risen ag.;lin by the end of NovemLer to (.:,634. I,lillion, or

almost the level o:f mid SU1TlJTl€r 1947.

•

•

.... 10 -

Belgian recovery has not only been accomplisL.eci Hithoat sulx:.t<'::':1tial

liquidation of its gold and dollar reserves, but also 'l.vithout ver;'T l~eav:l ad-

dition~ to its foreign debt burden. This compar~ti vely favorable sit·~cd.i()n

has been achieved by substantial oxports - some of them ;.lroducts i1!lported

from the Congo and exported in processed form - and recently by some reduc­

tion in imports from the dollar area ;"}:/ by favorable terms of trade, 8.nd

also probably as a result of some influx of flight capital from other

European countries. Provisional figures place Belgi-am's trade deficit for

1948 at BF 13 ~l billion 'Vuith eA~orts covering 85% of imports. The trade

deficit i~ December, Y.fhen eArports covered about 92% of imports, was only

BF 604 million (provisional) compared with a montbly average of BF 1,094

million for the year. It may be noted that whereas the volume of imports

has recently been at about the 1937 :Level, that ot expoj,"ts probably nOT!

stands at over 80% of the 1937 figure" IJo official data, however, have

been released since the first quarter of the year,

Progress has also been made toward the achiF,lvement of the Denel1.1.x

Economic Union., On January 1, 1948, the customs union between the three

c0untries came into being. quantitative restrictions were maintaineo. for

the tine being, but full economic union is scheduled to be achieved by

Ja.nuary 1, 1950. Substantial differences still exist bet'V'reen the econol'fJic

positions and policies of the two major pal"tners, BeJ,.gium and the Nether-

lands, however, and a strenuous effort will be required if economic 'Wlion is

to be realized by that date.

I, I.

'rotal imports, hmvever, have not fallen. The high fiGures for November and December 1947 were caused by the anticipation of the inauguration of the some1J'rhat higher Benelux tariff at the beginning of 192-1-8.

•

•

- 11 -

IIo PROBLEMS OF READJUSTMENT

Yihile Belgium has reoovered from the effects of t.he 1v'"ar to an,;:~{:....

tent at least equal to that of any other country formerly occu)iec~ b~" an

enemy J there are two major problems which must be solved if tLis recovr::ry

is to continue~ 'rhe first of these is concerned with foreign trade and tIle

balance of payments, the second with the level of prices and the rate of

cap~tal formation.

(a) Forejgn Tra.de and Balance of Payments ~ (

The postwar increase and recent steadiness of J3elgian gold and

foreign exchange holdings is an indication of the compara.tive strength of

the country I s external financ~.al position. HOTvever 1 the balance of payments

for 1947 summarized below shows oertain weakness~s~

•

•

- 12 -

Belgiurn-Lu,.,,,embourg Balance. of P~ents, 1947

~~n millions of Belgian francs)

Receipts Payments

Current transactions lvierchandise j(t .0. b.) 60,670 I 78,467 Invisibles! 26,4261' 12,05'"(

Total 77,096 90 ,52!~

Financing the Deficit on Current Il.ccount

Net balance on current account Autonotlous capital transact':'ons - Priva.te"" capital movements (l:lainly repatriation of

capital and arrears) Gold subscription to IHF Amortiza tion and other cor:tr.;:t.ctual repayments

Errors and omissions i

Compensatory financing FinariCIi1g of Belgian export s ---roans granted by Belgium

Increase in Belgian holdings of inconvertible currencies

Financing of Belgiar+ impo,rts "-roans-granted to Belgium

Decrease in Belgian holdings of convertible currencies

IliJF advance to Belgium Dec·rease in Belgian gold holdings

jJD.1ance -----

-17,75'7 L4,~:.?2

l':{ \ r' 8 - .... ..- ,t..t'C.

-13,h28

1-10 ,755 - 2,480 ..,. 984 ---

6,137

377

- 2,230

9 I rJ3 - ,.+::>

.;. 1,354

;. 1,433 ;. hG3 t 6,133

.;. 9,453

Including BF 2,6.50 million of allied payments for military e ::.:penditures and BF 2,027 million of personal and institutional remittances.

•

•

.... 13 -

Belg~ um I s overall cu;crent account deficit Yias moderate - BF 13. h brl.liou

U~306 m.illion) compared with total current l)ayments of BF 90.5 bill~on

(~?2 ,065 million) ~ but this was achieved as a result of

(a) exceptional and often non-recurring receipts (incl'lding

dollar receipts) on both current and. capital account. r:'he

repatriation of private long and short-term capital, for

example, amounted to DF 10.8 billion" alld Je10i~n received

BF 2.7 billion of allied paym.ents for military 8:"~~)enc.liture,'3 •

(b) the expenditure of considerable gold ane. hard currenc;y' re­

~-:,urces (BF 8.1 billion including a.dvc8nces fran the ILF) aHd

the accurnulation of substantial credit b&lances in soft

currencies.

It is also significant that BelgiUlll actuglly lent more than she borrovored.

Eowever, this was not all a sign of strength since it involved lending

through payments agreements to support exports to countries short of Belgian

francs aild borrowing hard currencies to finance i~:!ports especially from the

",jestern Hemisphere.

The vu] nerabjlity of Belgium's position arises chiefly £'ro:,: the

geographical distrib~tion of its trade in the postwar ye~rs. Before the

war J Belgium's imrr;ediate neighbors and the United Kin..;dom GOO.l\. :;2,~ of her

exports and provided her with 45ib of her Dnport reqJi:ceJ.lt:.dtS. Ger:-:'any ac­

counted for about 12% of Belgian imports anlt exports. In 1:7L~7 th8se coun­

tries were able to take only 37C;s of Belgimn I s exports largely because they

could furnish Belgium with only 29% of her import needs. Imports from the

United states J which had 9~mounted to only 10io of the total in 1939, rose to

26% in 1947. Bxports to the United States, hovvever, fell from 9;b of the

•

•

... II..,. '-

total in 1939 to only h% in 1947.

The significance of these changes can be seen from the following

synoptic table of Belgian trade balances yli th various parts of tr~e v;orld.:

Geographical ~stribution of Belgian Trade "'---. ~-

Yiestern Hemisphere Sterling area

U.K., Sire & Iceland C'~,:1er sterling area

Other EGA countries Belgian Colonies Other countries

(In, millions of Be 191an francs)

1938

-1,83t.6 f. )8L~q7

,,1,213.2 -1,094.8 I' 8 r 11 .3 -1,213.2

,'1,242.8 8SS.1

-23,919.5

1/ U.K. only. 2/ bxcluding ~ire, Iceland & U.K. colonjes. Y Including Eire, Iceland & IT.K. colonios.

l1.nnual Ra t6 Ja~.-Sep~~94£

-2,013.1 lJh.6

Before the war Belgium used its substantial export surplus with Kurope - and

also its net income on account of invisible items - to meet its trade dei'icit

with the ';i1estern Hemisphere and other overseas areas. The dentruction ilnd

impoverisnnent of war disturbed this balance. tll though they stood in great

need of Belgian supplies of steel, machinery and other industrial l)roducts,

most countries of Lurope could no longer £?xport as much to Belgium as t:1ey

had before the war nor earn surpluses in convertible currencies elsewhere _

especially after the suspension of sterlin{;; convertibilitJ.~ in 11.Ugust 1947 _

to meet trade deficits with Belgium. The loss 0::: the German trade was es-

pecial1y serious since Belgium had received a considerable volurae of equip-

ment from that source before the wa.r. In the postv,,".:·~r years, the only' large

source has been the United States.. In 1947 Belgium had an overall trade

deficit of almost BF 24 billion. Its deficit with the western Hemisphere

•

•

- l5 -

was even slightly larger.. The trade surplus wi i}h v-lestem Enrope, Lov;cver? t;:as

less than BF 2 billion mainly because the prewa~ surplus with the United King-

dom was replaced by a substantial deficit. In ad.di tion, hOYleVer, Be1[iuu :rlr;~t

helve obt.ained large net receipts from these countries arising out of curl'e:!"1t

invisible items, repatriation 0:(' assets and the failure of exportel"s·to031€~.um

to repatria.te the proceed:;) of their sales since it has had a substa~ltial 6P.r···

plus of most Eu.ropean currencies including sterling.') Lith most of Belgium's

best customers chronically short of Belgian f:ranes, Belgian exports, es?e-

cially of so-called non-essential goods, have encountered increo.sing diffi-

cuI ty in fjnding markets although they have been sustained by substant.ial

Belgian credits to rrlost European count:ries" Obversely Belgium, unable to ob-

tain needed sl.lpplies from its old sources and thl1.s increasingly depend.ent on

the ~'iestern Hemisphere., has not been able to increase :L ts expor" . 0 that

area €i10ugh, and has had to rely on other mea.ns of acquiring hard currenc:ies.

The import surplus 'with the Congo is a source of strength rather than of weak-

ness since nany of tbe imported products vvere processed and excha.:rlt;ed agCti!lst

hard currencies •

An analysis of its exchange transactions carried oat by the Interna­

tional l'lonetary FundY shows clearly the means by which the deficit wi t.h the

.~estern Hemisphere was financed. As has already been indi.ca t6 '? part of the

Belgian dollar deficit was met by long-term borrmving, bJ short-·term credi.ts

and International i.ionetary Fund advances, and by sales of gold from the re-

serves of the Central Bank. 'Ehe largest part, hovfever, was paid vd th net

1/ N~te 'on Fin~ncing of 1947 Belgian Baiance of' l.la:'J'm~nts: prepared bY-­- Hobert Triffin, H.D 742, Novet1ber 8, 194$. It should be noted that

the exchange control data refer not only to current account trans­actions but also to certain capital transactions and ar~ not directly comparable to those presented in the ba.lance of pa;yments.

- 16 -

gold and dollar receipt$ from va~ious European countries. These amounted to

the equivalent of BF 16.5 billion (:,;)375 mi}.lion), of which BF 12 billion

( 273 '11') f th TJ' t d 1'-' d BF 2 1 b'"'' " " r::r' '1" ) " ml ~on carle rom e l n~ ",e '~lng om, 0 W. :L.L-'_lOn \ .. './;' IDJ_. ~ . ..Lon

from li'rance and BF 1.3 bil:1.,ion ('S30 million) from the Netherlands. rrhese

sums, supf-lemen ted by smaller payreents by BelGium. in s-ter~ine to Brazil and

Uruguay, vrere applied to payments to the d'estern Hemispher~.

Provisional fi~"llres for 1948 shmv an overall trade defici -:., of Eli' 13.13

billion. It m.ay be noted, hO'.'Jeyer, that the data for the latest months show • only a small trade deficit so that, if a small surplus on invisible items is

assumed, ti_r::1 overall current account positj_cm is now approxinately in equi-

librium. This year no large net receipts are to be expected on uovernment

account. .Ii.ssuminF. personal and institutional rend tta:1ces and other invisible

items on which no information is available to be rupnins 2.t the same rate as

in 1947, one might expect an overall deficit on current aCC01.:mt for the i'ull

year ot about BF5-6 billion. The decline in the overall tracle deficit results

mainly from the decreased deficit with the '4estern Hemisphere partly because

• imports were abnormall~T high in 1947 and partly as a cODBequence of Bt:::lgian

restrictions (thro'lgh licenses) on imports from that area. ;l'he trade defici.t

with the ':,:estern Hemisphere for the first ten months of the year amounts to

BF 11-12 billion. However~ varioUG extraordinary receipts of hard cu.rrencies,

for example payments in U.S. and Canadian dollars for allied mtlitarJ ex-

pendj.tures in Belgium, will also not be available in any volume this ~~ear.

The Belgian dollar deficit for the first ten months of 19h8 haS been

met substantially from the same sources as in 19h?.. Borrowing ;from the

United States amounted to the equivalent of BF 2.192 billion and advances

from the Interna tiona1 ir!onetary :F'und to BF O. 961~ billion. il.s a result of the

•

•

.,; 17 ....

lag in EGA financing, reimbu.rsements on that account were very srriall., (In

the last months of the year, however, they have risen considerably). Net [ol{

and dollar payments to Belgiu..m by countries outs ':" the Western He.n:i s;.Jbe:.. ... e

and the Bizone were again by far the most important, source of hard cur:::"2~lcy.

{,lost of these payments were made by EGA countries to whic~ Belgium also ex ....

tended substantial additional net credits. It may be noted that tlle iSold and

dollars received by Belgium '}'rere more than sufficient to fill the dollar gap~

In the first ten months cf the year the C01Jntry's gold re.J8t'veS· rose by BF

2.1 billion.

It has become increasingly clear that equilibrium in intra-European

trade could not be restored quickly, that other cou!1tries c0111d. not continue

to finance Belgium's dolla.r deficit b~T payments from dwindling monetary re-:

serves, and that Belgj.um was not 1n a position +,0 gra.nt large adeli tional

net credits without substantial risk of furt.her ;infIe.tion. To cope with this

problem, the OEEe intra-E.;uropean Payments Plan was developed linl-:::ing dollar

allocations li~Titl~ provisions for financing intra-European trade. For the

period .A~)ril through June 1948, Belgium-Luxembourg received an EHP allocat:l.on

of ",20 million (:;;17 million in loans and ~p3 willion in gr.ants). Under the

OEbG 1948/49 il.l1Dual P::-,ogram, dollar aid for the period Jul;y- 19l.lB through June

19L~9 amounts to ~;2S0 million. Thus Belgium will receive for the 15 months

,;ii270 million, of which ,~S9.5 r.:illion is to be in loans. Of the ;,i250 million

for the period from J'uly 194[r through June 19L.9, however, only ·i~42.5 m;illion

is unconditionally available to finance a Belgian net impo·rt. surplus. The

remaining ~207.5 million is only available as BelgiQm makes equivalent grants

(drawing rights) to other participating countries, notably the Netherlands,

France,. the United Kingdom,. Norway and the Bizone. Up to the end of October,

•

•

.. 18 -

ECA reimbursements were less than "1>10 million although p~ocure'nent author~_z.a­

tions were much larger .)j Furthermore, other EGA. countries expect to Eiake

gold and dollar payments to Bel~ium substantially larger than the gold. and

dollar receipts shown by Belgium, and Belgium may also receive some gold and

qollar pay.nents from countries outside the Western Hemisphere and not :f.ar-

ticipa.ting in the European Recovery Program~ Since the country's gold and

dollar deficit for the period July 1948 t~rough June 1949 is expected to run

2 / at a rate of about '~33 million per month"J Belgium might well reach the end

of the fiscal yea.r vvith a loss of monetary reserves considerably lOIHer than

the .;,147.6 ':-'lillion anticipated in t!1e Of ,Ee 1948-h9 annual program.V 7.he

burden on Belgium, namely the Belgian franc grants to other ECA cO'lntries ~

is, of course, not inconsiderable, but the fact that, it is offset by equiv-

alent dollar grants should prevent its having serious effects on the monetary

system. If the aLEC Pa;y-m~nts Plan funetions as is hoped and is continued in

sOr',e suitable form for the relilainder of the ERP peri.od, it should allovl a

breathing space in which equilibrium in the Belgian balance of payments with

the other participating countries may be reached •

Such a.n equilibrium does not of course necessartl:f mean that Belgian

rece5 !yts from and payments to Europe should balance exactly. The strncture

of intra-European trade after the EHP period cannot be foretold. That it

will be ctfferent from prewar, however, is clearly i'oreshadowed by the

---""---""T,-- I --_._--_. __ _

In the last months of the year, reimburser;lents {'jere apparently sub­stantial. The Eximbank credit is e}~hausted and although ·~!32 million of the Canadian credit is undisbursed, it is unlikely that it '~vill be used. Thus Belgium has no other source of hard clJ,rrency to tap, The Bel~ian current account deficit in gold and dollars is estimated in the Belgian submission to OEEC at ~:j)346.8 million, and there are ex.pected to be other transactions ;Lnvol ving net gold and dollar pay­ments amounting to :.»)0.8 million. ':'he United Kingdom used tvm-tbirds of its dravring rights on Belgium within two months.

•

•

- 19 -

realization in the Uni ted Kinbdor~ longterL1 plan that the Uni ted I(~ingdorn, c. t

least for a time J cannot afford its large pre'war surplus with continental

Lurope, including Belgium. Thus Belgium r s foreign trade lJroblems £Lre ~)ot.

merely transitc,ry but involve important structural adjus"cments in its t:::-Elc .. e,

for example, increased exports to thet'~estern Hemisphere and pe~:'haps red'".cetl

iIilports from that area. -'.Jven ~alloviing for such changes, h:::)\!!8VOr, Eelgi.ml

will probably still have a deficit with the VJestern Hemisphere and some -

though reduced - surplus with Europe. Thus, its ability to meet its dollar

payments will again depend to an important extent on its ab11i t,y, to earn

dollars thl 'Jugh surpluses Yli th other areas incl'J.ding ~urope, in othE.r v:ords

on the achievement of a substantial degree 01 conv6:::-tibility of :buropean

currencies.

This is, of course, true of pra.c;·~ically all European. countries and

the long-run outlook for the Belbian balance of pa;y'ITlents is brie:;hter tha!l

for many in several respects. Although its net income from transit trade is

not likely to recover fully to the prerfar level, Belgium has not, like the

Uni ted KingdoY:1 or the Netherlands, been forced to liquidate a 12.rge 'p1.)rt~.on

of its foreign i.nvestments but Oa.s probably' continued to incre.:lse its ea:cr.il1g

assets abroad. Neither has it aCCuInul4ted large foreign debts li:~e t:'le TJni tad

Kingdom, the Netherlands or France. In particular its U. S. a.nd Canadian

dollar payments on account of interest and amortiza'hion are not very lleavy.

Assuming that ECho loans continue, though on a reduced scale, it is estil:mted

that these pa~rynents will average less ttan ~20 million in the 10 year s fol­

lovring the end of ERP compo,red, for example, with well over ,:~hC) mil1 ion for

the Netherlands. Belgium will, like other European countries, suffer from

the loss of Germany both as a market and a supplier, but it v{ill not be so

•

•

- 20

severely affected as tl!e lietherlands. Finally, its position in the CODGO is

.secure unlike that of th3 Dutch in t.he Indies. Thus the struc~ural 3.d~'_lSt­

ments re-iuired in the Belgian balance of pa~mlents, though painful, are s';'~c~:ler

than in the case of many countr les in ,ifestern Europe, and Belgium is in a

stronGer position to nake them than mo.st.

To a breat extent Belgium's foreign trade problen is not of its ov;n

:'Jaking. How8ve~.', this does not mean Ghat it cannot contribute to its S0J_U­

tiona In sone fields, as the l-'rime .;.·iinister indicated in his policy state ....

ment of :·Jover:1ber 30, .iJ3lgian ex}")orts are already hindered by hi0;h ~C'ri.ces.

Belgiu'l :'TIust soon face the fact that :!rices and costs are ont of line V'.fith

the realities of a cO:flpetitive mar~:et. It h.::.s been possible to postpone

corrective act.ion in tllis area ~nly because of the lHorJ.dwide sJ.l0rt.ahe of boods,

1N11en t~e supply of cOr.ll.10di ties catches up with the denand, hOFever, Belgian

producers may well find themselves at a disadvant2 u e in ~'rorld n.C:i.rl~ets unless

costs are reduced.

(b) ~ces, Costs and Capit:~l Formation

An attack on the high level of prices and costs might be pursued

alonG tl!{O f.1ain l.ines, either by reducing money waGes or by ct:tting costs

through the introduction of better machinery and other means of usin_'l labor

more efficiently. Hot Guch can be expected of a policy of wae;e reduction~

In a 11lodern incl~J.strial economy, wages are fairly rigid in a dovn1ward direc­

ti.on. Furthermore, in the pt;:lculiar BelGian situation, where important sec­

tors of industry, notably the production of durable goods, are 'working at

full capacity and all the adjustri1ent would be thrm~m on the other parts of

the economy, mainly that producing norl-durable goods, the cut in employment

•

•

- 21 -

in these sectors re~uired to induce 8. sufficiont degree of deflation "!7Quld be

very large. That it is larger than the Belgian Govern1l1ent is prepared to

face is indicated by the Finance Hinister' s recent announcement that a 31lPi)le­

mentary budget..!! will be :introduced to combat the growing unemplo~."~.lent which

may be expected to become :1eavier in the winter months. With the possib.Ll.it:r

of any substantial reduction in lTIoney wages excl11ded, the Jelgian pI'ice ~)J'ob-

lem, therefore, resolves itself r.la.inly into an investment problem •

A future currl:l1cy devaluation can also, of course, not be left out

of account and r::.iGht becoJ:'le desirable in the fut11.re. For the present, hovr-

ever, the Belgian franc is strOl1b in rela.tion to nIl European currencies e:::-

cept the Swiss franc I) It '1!ould 'be naturally prefe7.~able if any such n.easure

r,"c:"e t2.!{en v,Ii thin the framework of a general readjustment of I:uropean cur-

ren~ies •

l'he advantage of the Belgian f,ostwa:- policy of enCOUr3.bing consl~mp-

tion ar.d curbing monetar:r e:::pansion has already been stressed. It lIas, how-

ever, had the obvious disadvantage in that effort 'Nas channelled into the

l'roducti.Jn of consumption boads and e):ports at the price of neglecting recon-

struction of war da;ilage and re-equipment of indl~stry and necessar~.7' public

vvorks such as the improvement of roads, ports, etc. Bele:,imn has thus co.rl"ied

out its remarkable recovery viith industrial eq'lipr.J.ent w!1ic:1 is, on U-J.e idhole,

rather old. l~bout 50% of Be16ia.n TIachin8 tools, for example, and 35~~; of its

coking ovens are more than 20 years old, while railway engines have an

average age of 26 years. Besides, product.ive equipment 'Nas inadequately

Y;1aintained during the war and often suffered attrition from accelerated war

11 Li ttle provision was r:lade in the ordinary budGet for IJubli.c 1nrorks. W'hether or not. the supplementary bud6et will be financed by borro1f'!i:1g or out of taxation, the Finance 11inister did not say_

•

•

- 22 -

use. The recovery has also, as for example in the case G:~ electric po"rer

production, been accomplished by runninb the available equipment at a :-::-ate

of utilization far above normal. It should, hOlffeVer, be noted tLat al'L}~o·.1;::11

the average a66 of Belgia.n equipment seems high by American standards, it is

by no means unique in Europe.

In order ~o determine the maE-ni tude of the countr~r' s investIJ1e~t lil'ob­

lem and to aid in its execu'L.ion, the ~rinistry of l:'Jconomic Coordinat.ion and

National Re-equipment has collected the individual investment requirements

in each industry to ..:;,ether with the necessary public ymrks prograilS. It

should be made clear that this is not an oyerall plan involving priorities

or allocations but morely a collection of data. Indeed, Belbium has per~aps

suffered some disadvantage recently because of an inadequate coordtnation of

investment and certain projects have been built Khich could not be considered

of the highest degree of urgency_ In the ':Chird Heport on Investraents re­

cently issued by the Linistry of Lconomic Coordination and IJational He-equip­

ment, the annual cost of the total ten-year public .::.nd private investnent

program has been put at almost 13F 40 billion compared with act'ual invest­

ment::; by BF 3)~ billion in 1947. In the first few years of recover;.', the

annual cost of required investment is put at BF 42 billion. Although the

available Belgian data on national income and c.;;l.pital formation are far f'tJIn

satisfactory, it is interestint:, to set them alongside the fiLures for the

United Kingdom.

•

•

- 23 -

National I.!l£.2me and C api tal Formation in 19h 7

Belgium United Kingdom (BF billion) 11 milli~

(1) National income 215 8,770 (2) Gross capital formation at home 3h.0 1, 94l~ (3) Net borrowing abroad and sale of

13'.4 assets to foreigners 675 (4) Total caf'ital formation (2)-(3) 20.6 / 1 0"Q , ,.b" (5) Net capital formation at home 15,.0! 1,169 (6) Total capital formation as a per~

centage of national income 9.6 lLl..5 (7) Net capital formation at home as

a percentage of national incase 7,+0 13.3

Y No information is available on depreciation allowances in,Belgium. It has been assumed that they bore the same relationship to national income as was the case in the United Kingdom (9%).

It would thus appt-.~ar that in 1947 the rate of capital formation in Belgium

was significantly lower than it was in the United ICingdom~ Figures such as

tl'!ese should of course be used V\rl. th great caution and merely to illustrate

the nature of the problem. The data j especially the Belgian, are far from

satisfactory and a small error, for example in depreciation allo'\lyances,

could change the figure for net' capital formation significantly. The esti.,..

ma tes of depreciation allowances in the United Kingdom are ob tained from tax

data. based on original rather than replacement costs and are thus lovv.

Finally, such calculations cannot distinguish between investments that are

directly connected vvi th the industrial or agricultural apparatus of the coun-

try and those that are not.

fEhe ratio of 1947 investment to the required average for the ten-

year period varies considerably between different sectors, In a large part

of the private se~tor the rate of investment in 1947 appears to have been

fa:irly satisfactory. In coal minins and electrio pOVfer production, how-

ever, and to a less extent in the steel and "coal ch~mistryU industries, this

•

•

- 24 -

was not the case, Investment in coal mines and electric power amount6d to

BF 1300 and 1451 Iilillion in 194?, compa.red lJvi th yearl? re4uire''1en-ss during

the first few years of recovery of BF 2100 and 2700 milli.on respe~ti vcl.Y ~

Investment in the steel industry and in "coal chemistry" amounted to BF 750

and SOD million compared with BF 1100 and 750 million respecti vel~T. The

1947 fiGure for housing and agriculture 'NCl,S also well below the esti!.w .. ted

annual average requirements for the next few years.

In the public sector, the ratio of actual invest!:1ents in 19h7 to re­

quired investments vras far 101\'e2.", for in 19h7 actual investments reached only

about two-thirds of the estil:lated yearly req,'\.lirements during the first few

years of recovery~ The ratio was lowest in railroads, ports and publ:LC 'works

where actual investments in 1947 amounted to only DF 2733) 262 and 2865

million compared with yearly re~uirements during the first few years of re­

covery of BF 4500, 1000 and 4800 million. The decJ.ining deficit in the over­

all budget (estimated at less than BF 5 billion for 19L,.9) has thus been

achieved at a rather heavy cost in deferred reconstruction and re-equipr:lent~

The provision of a large volume of ~onsumption goods has not up till

now improved the incentive to save and high interest :rates are an indication

of the difficulty of raising money as well as an instrument of monetary

policy~ Although the overall result of the Gutt monetary reform 'Jiras salutary,

it did have the undesirable effect of creating some distru.st of the currency

and consequently of reducing the public's desire to & ~.ve ~ In addition,

Government tax policy may also have impeded capital formation somevvhat al­

though depreciation allo·wances seem rela.tively generous compa.red for example,

to the United Kingdom.

The Government has tried various measures including, for example,

•

•

loans with lottery features, to encourage savings, but the success of these

has been very limited. The rate of net accumulation of deposits '!:i!ith the

Caisse Generale d'Epargne et de Hetraite is about the same as last yt:;o.r,

Tr:e capital market has shown some '~endency to absorb an increased volume of

funds through nev.[ issues, perhaps as a result of the decline in the import

surplus. It is clear, hOlf!ever, that the aOJ:16stic capital narket is unable

to meet the demand for funds on the scale required to fill a gap as large

as that between realized and required investment in 1947 which amounted to

BF 8 billion. The Belgian Treasury is still chronically short of cash, and

since the overall budget for 1949 provides for a d,efici t of almost BF 5

billion, savings of the state cannot be expected to fill such a ga.p either.

Some additiona.l funds trlill be available from abroad. The proceeds

of E,CA loans and unconditional grants for which Belgium has not yet been

reimbursed will amount to about BF 2.3 billion in the current fiscal year,

and the proposed IBRD loan YlTould give an additional BF 0.7 billi0l1 11 ~To in..,.

formation is available on the volume of industrial self-f:Lnancing in 19h8 •

Unless it is substantially e;reater than in 1947 or unless tax receipts are

increased either by hea.vier taxes or improved ~011ection .. it is hard to see

how investments as large as the requirements of the Third Report of the

.L.:inistry of I.conomic Coordination and National TIe-equipment can be met in

full ~lthout resort to some deficit financing on the part of the Government.

Perhaps this is the meaning of the recently annou.nced supplementary budget.

As a result of the recent Central Bank reform, net new' borr:)wing facilities

of about BF 4 billion 'Here made available to the state. Up to the end of

October about BF 1.5 billion of this appears to have been used 11p_ Despite

the existence of growing unemployment in BelGium~ such deficit financing

•

•

- 26 -

would have inflationary effects on the price level since resources in the in­

vestment goods industries .... which would be affected most - .. :\re still fully

employed. On the other hand, the Third Report on Investments is in no sense

an investment plan so that some projects might be omitted and 'Ghe inflat:.ionar:.

:L11lpact thus minimized. On balance it would appear probable ... on the basis of

the limited information available - that with moderate calls on foreign capi-.

tal and perhaps a further limi ted volume of deficit financing;) a fairly satis­

factory rate of capital formation can be achieved •

•

•

Table I

Table II

Table III

Table IV

Table V

Table VI

TaL":"e VII

STaTISTICAL .APfLNDIX

Index of Industrial Production

Inland Watenvays Traffic, Rail Traffic and Antwerp Port Traffic

Index of Department Store Sales

Unemployment

Prices and vljag~

Uoney Supply

Goyernment Budgets 1945-1949

Table VIII Evolution of th~ Public Debt

Table IX

Table X

Table XI

Belgium~Luxernbourg Foreign Trade by Categorie~ According to the Brussels Classification

Exports and Imports of the ~elgo-Luxembourg Economic Union by groups of products

Gold and Foreign Exchange Reserves

Table Xlr Total Interest and Amortization Payments on Ex­ternal Debt of Belgium

Table XIII Belgium-Luxembourg Balance of Payments, 1941

Table XIV Belgian Investment Program

;'~

I.ABLE I

Index of InnU8~~i~1 Prcduction

(Av8raee 19~,6-1938 = 100)

Textiles I~iet[;l Constrac- l\iatural Artificial

Coal Steel Products tion Fibers Fibers Cement w"eight 20 10 20 10 16 4 '10

Production Production Production Production Pre [1000 M!T.l Index ~lOOO M!T_) Index (1000 M.T.} Index Index Index Index (1000 l',;f.T.J Index_ -'He~

1936-38 2,420 100 259 100 110 100 100 100 100 250 100 j

1946: January 1,944 80.3 154 59,,·4 85 77.3 60 80.6 209.1 50 20 July 1,828 75.5 201 77.t: 108 98.2 90 89 298.3 192 76.8

1947: January 2,140 88.4 228 88 125 113.6 65 119.2 4-17 .• 1 181 72.4 February 1,934 79.9 209 80._ 7 117 106 .. 4 65 106.2 370.5 12J 49.2 March 2,198 90.8 229 88.4 116 105~.5 90 115.3 361 .. 7 145 58.0 April 2,184 90.2 234- 90.3 127 115.5 9.r' 122.7 376 .. 4 215 86 May 2,081 86 0 0 228 88,,0 130 118,,2 9~ 106.4 353..9 236 94.4 June 2,010 83.0 232 89(16 122 11009 97 110.9 348.8 197 78.8 July 1,860 76.9 243 93.8 130 118.2 90 104,,7 274,.6 250 100 August 1,826 75.5 227 8707 125 11306 87 97.5 15808 233 93.2 September 2,004 8208 209 80.7 130 118.2 97 110.6 287/).5 222 88.8 October 2,143 83 .. 6 27 9 107.7 13.5 122.-7 97 129&2 266<.6 275 110 November 1.910 78.9 266 102,,7 135 12207 95 11505 245 264 105.6 December 2,067 85.4 296 114',.3 140 127 .• 3 85 116 275 .• 7 263 105 .. 2

Steel 10

• T.A.BLE I

Index of Indust~i~l Prcduction

(Av8raee 1936-1938 = 100)

I~let:;l

Products 20

Construc­tion 10

Textiles Natural Artificial Fibers Fibers

16 4

•

Cement 10

Paper 5

Electricity 5

Production Production Production Proouction Production (millions

tlex (1000 M.T.) Index (lQQO M.T .. ) Index Index Index Index (1000 H.T.) Index (Metric Ton) Index .ci"·If':m). .. Index

b 259 100 110 100 100 100 100 250 100 16,000 100 436 100

.3 154 59 .. 4 85 77.3 60 80.6 209.1 50 20 523 120.0

.5 201 77 .. 5 108 98.2 90 89 298.3 192 76.8 17.480 109.3 486 111·.5

.4 228 88 125 113.6 65 119.2 4,17 .• 1 181 72.4 17,460 109 .. 1 646 148 .• 2

.9 209 80.7 117 106 .. 4 65 106.2 370.5 123 49.2 16,330 102.1 580 133..1

.8 229 8e.4 116 105,,5 90 115.3 361 .. 7 145 58.0 17,850 111.6 604 138·.5

.2 234 90.3 127 115.5 95 122.7 376.4 215 86 18,880 118.0 550 126.1 00 228 88~0 130 118D2 95 106.4 353..9 236 94.4 18,500 115.6 56Q 128 .. 4

13.0 2)2 89n6 122 11009 97 110.9 348.8 197 78.8 18.,900 118.1 550 126.1 6.9 243 93.8 130 118.2 90 104,,7 274 .• 6 250 100 17,600 110 559 128.2 ~.5 227 87c7 125 113.,6 87 9705 15808 233 93.2 17,000 106.3 559 128.2 2!O8 209 80.7 130 118.2 97 110.6 28705 222 88.8 19s600 122.5 574 131 .• 7 3 .. 6 2?9 107.7 135 122.7 97 12982 266 .. 6 275 110 21.,300 133.1 649 11.J.8.9 B.9 266 102 .. 7 135 122 .. 7 95 11505 245 264 105.6 21,200 132.5 646 148.2 ~.4 296 lILJ, .• ) 140 127 .• 3 85 116 275 .• 7 263 105 .• 2 23,090 144.} 698 160 .• 1

- continued

Overall Index

100

76.5 96.4

111..4 100· __ 3 108.3 115·.2 112..1 109~ • .J 10.7

98.3 108.7 119·.1 113 117 .. 6

fr:,

1.0J.,:n:~ I - pCl.[je 2

Production Production Procluc-(iion Production (1000 Iii. T.) Index (1000 M.T.) Index ( 1000_1"1. rr .. ) Inde:;,:- Index. Ir:oex Inclr::.!- (lOGe:. 1'1

1948: January 2,293 94.8 312 120·5 lll7 133.6 80 131.7 274.5 272 108.8 February 1,750 72.3 293 113,,1 145 131.8 75 116.1 226.4 255 102 March 2,298 95.0 327 126.3 155 140.9 90 121.7 265.4 270 108 April 2,317 95.7 337 130.1 167 151.8 97 ·120.6 282.0 292 116.8 May 2,069 851>5 306 118 0 1 171 155.5 97 '97 303.6 301 120.4 June 2,288 94,.5 2110 92'A7 148 13LJ·.5 98 103.8 350.2 291 116.4 July 1,985 82.0 317 122.4 140 127.3 98 95.3 3/J1: .8 27'1 108.4 August 2,180 90.1 351 135.5 130 118 .. 2 98 86a6 367.8 2.90 116 September 2,337 96.6 352 135~9 147 133c6. 98 101.6 359·5 325 130 October (rev.) 2,431 100.5 372 14).,6 147 133 .. 6 98 104.2 371.6 310 104 November (pro.) 2.338 96.6 352 13509 158 1431)6 97 901>9 338.2 25) 102 December (~rogr.)2,425 100.2 360 139 160 145.5 95 90 368.8 220 88

Source: Agence Economi.r._ue et Financiere.

• • ~},_"3I~ I - ~i?nce 2

?roduction Production l:-'roductiion Production ?roducticn (millions Overall

1000 i'1. T. 1000 i'i. T .. Inde:.:- I,~dey~ I ndr;x Inoex ( 100l_ fl. '1'.) Inclex (l"ieJ.;ric To..nl. Index of ILH1) I ndex_ ~n{J.~x

312 120·5 147 133.6 80 1)1 .. 7 274'.5 272 108.8 20,032 125.2 703 161.2 122.9 293 11J"1 1b-S 131.8 75 116 .. 1 226.4 255 102 17,000 106.3 661 151.6 110.5 327 126.3 155 1401>9 90 121.7 265.4 270 108 22,370 139.8 673 154.4 124.4 337 1)0.1 167 151.8 97 120.6 282.0 292 116.8 22,050 137.8 651 149.3 128.8 306 118 0 1 171 155.5 97 '97 308.6 301 120.4 19,000 118.8 614 1110.8 122.,6 2110 92 ... 7 148 13b..5 98 103.8 350.2 291 116.4 19.397 121.2 590 135.3 120 J17 122.4 140 127.3 98 95.3 34l:.8 271 108.4 15,090 94.3 600 137.6 115.4 351 135.5 130 118.2 98 86.6 367.8 :2.90 116 18,200 113.8 635 145.6 118.2 352 135,,9 14? 13J~6- 98 101.6 J59.5 32.5 130 19,000 118.8 648 148.8 126.4 372 14),,6 147 133,,6 98 104,.2 371.6 310 104 21 .. 000 131.3 697 159.9 129.5 352 13509 158 14306 97 90.,9 338.2 255 102 19,900 124.4 710 162.8 124.0 360 139 160 145.5 95 90 368.8 220 88 20,000 125 750 172 125.3

Fin8nciere.

\

•

•

TABLE II

Inland Yiaterw.:;l.Ys Tr3.i'fic Rail Traffic an-d':AntWe'"rpl/ort ·Traffic , .... ,. -,.....~.-. .--. (monthly averages or calendar months)

Railway Inland Antwerp I

Freiaht.Y Wa tervITaysY Port Trafficd! Ton Kilometers Ton Kilometers Unloadings L02.c1in r ·s

- (000,000) (OOC,OOO) (000 tons) (m')~:Z-J , ... Jv'. '(,0;,18 I

1937 519 244 1,193 1,177 1938 429 250 989 975 1946 391 146 743 242

1947 h89 168 1,331 520

1948 - January 557 166 1,845 595 Fetruary 467 163 1,27h 629 March 532 213 1,618 595 April 539 186 1,116 596 May 486 199 1,115 530 June h72 191 1,120 562 July L~60 178 1,030 51.~4

August 503 178 1,004 ,3d September ,00 930 633 October 522

1/ Societe Irationa1e des Chemj.ns de Fe~" Belges only. y Inland ~Nater1Na:rs traffic is divided between internal and internatior~al

traffic as follows:

Intern~l International

1938~!-1946 1947 1948 March

Trafflc Traffic ,thousand metric tons)

1,125 980

1,106 1,314

2,110 600 827

1,183

Total -3,235 1,580 1,933 2.,497

~}Rough estil;:ate of the IBRD Economic Depa.rtment transportation section.

Ocean traffic. Only goods passing through custo~s. the tonnage is gross weight.

Source: Bulletin de Statistlque.

Since January 1940

•

•

191..6 July December

1.947 January February Farch Al ril Lay June July Au@st September October november December

1948 January February l1arch April May June Jul:,r

TABLE III --.

Index of Department Stofe Sale~ ~..-..-..--"''''~~'~''-'''- ......

Average Daily Sales 1936-1938 = 100

Y Index of monthly sale s.

3.DSY 4131/

285 '477 344 371-356 300 312 321 373-398 L!.52 h99

350 357 423 h20 h17 3h6 397

Source: Bulletin de Statistique, J\.ugust 1948.

•

~ ~. •'

1938 1939 1944 1945 19L~6 1947 1948

TABLE IV _._._-

Part.ially Unemployed

n.a. n~a.

n"a. 29,077 i9,257 31,921

- Janl,lary ,36,962 February 63,G70 March 31,338 Ap:L'il 33,117 May 34,439 June )-+2,903 July 59,703 August 48 ')~,... ,~,.; (

September 43,168 October 4!.\., 763 November December (week end-

ing December ll) 60,300 (week end-

ing December 18) 60,000 (week end-

ing December 25) 76,000 (week end-

ing January 1, 1949) 132,000

Vvholly Unem121?¥ed Total.

. n.a. 17},913 n.a. 195,211 n.a. 24.1,296

115,502 14L~, 579 48,0.35 67,292 35,639 67,560 68,328 105,290 71,854 135,724 6h,113 95,451 61,562 94,679 59,606 94,045 61,8l4 104,717 69,571 129,27h 7h,292 122,549 81,065 124,,233 87,604 1)0 'J,"7 (_,-,"0

112,300

133,100 193,400

l83,800 2L.3,800

192~4oo 268,·400

185,000 317,.000

Y Unemployed registered wj.th the Unemployment Assistance Fund., Because the assistance fund has been expanded to cover a larger proportion of the total employed population, the statistics are not strictly com­parable throughout the series.

Source: Rewe du Travail. Decen.ber figures from Agence Economique et Financiere.

•

•

T.,illI£ V

Indices of ~ri~ &ng~a~;es

v~ho1esale Retail :"a _~sl/ Prices Prices .v b'" -

1936-38 = 100 1936-38 = 100 1936-38 = 100 _. ____ .>J<o_~_

1937 108 lO4Y 1938 104 lO6~/ 1939 103 lILY'

339 .1.~Y, 1946 301 333~ 1947 36LI. 36L~ 36h. 7~/

1948 - January 400 366 February 42.1 387 11al'''ch 419 393 373 April h28 396 May 428 398 June 422 397 380 July 426 396 August 426 400 September 425 40h October 412 377 November 391.:. December 39$

1/ Average hourly earnings. Y December.

Sources: Wholesale prices: InDtitut de Recherches Lconomiques et Sociales Retail p:rices: Einistere des Affaires .cconomiciues. November and December figures from Agence hconomique et ~·ir:.anciere .. lIVages: National Bank of Belgium

•

•

TABI~

Belgi.an Honey Supply

(Billions of Belgian Francs)

.Depo~i.t)~~L(Gr~ss) _ .. Total

Currency National Other Postal'Check Money Blocked

(Gross) . Bank Banks ~ys~~._ Supply .. ~~2eL --.- ..... :------

1944 Septemby l06.l 4.1 43.1 10.9 164 .• 3

1944 October1 31.7 3.6 1$.4 6.7 ~704 1~).3

1945 December 76.9 3.h 34.7 18 e 5 131.h 78.1

1946 December 77.8 h.S 43~8 2502 147.9 66.0

1947 Unrch 79.6 c: ':) 43.4 23.8 11+9.1 60.2 ~ . .)

·June 79.9 5.0 4~ .• 1 2,5,8 1>1~9 58.0

September 82117 3.6 44 e O 26,1 1;;4.3 55.7 December 82.8 4.9 43.3 27!t8 155.1 52.8

1948 Jiarch 81.D 5.2 44.9 22.8 151,3 50.6 June 82.7 5.7 46.3 23.1 15SlJ7 44.3 September 86.7 5.0 44.4 2h,6 1,S.5

October 86.1 4.6 26.1 Novemter 85.7 26.0

11 October 6, 1944.

Note.: Figures for 1941~ are taken from a different source than the st1.bsequent figures and may not be comparable to the last digit.

Sources.: International Financial btatistics IMF Report RD 59.3, Belgian Monetary n~forms .•

•

•

"

TABLE.vII

Governmen.t, .I~l1.dge t~ 19h5":"1949 (Millions of Belgian Francs)

19,45 1946 i947 1948

Receipts

Ordinary 21;202~O 42;242.0 46:,395.0 -JJ' 6r' ,b, ;JO.O

Resulting from the war 46.0 }~,184.0 ShleO 2,060,0

Extraordinary 30.0 Ih,229.0 6,895.0 6,910.0

Total 21,278.0 60,655.0 53,831.0 65,620.0

Expenditures , -Ordinary 28,366.0 31,928.8 36,055.1 h1,566.2

Resulting from the war 26,242~4 M.45.2 2?,176,,8 19,845.3 } I

Total ordinary and re-suI ting from the war 54,609.4 69,974.0 61,230.9 61,411.5

Extraordina:ry 2,482.\ 27, 7}~9.1 24,609.1 17 736 6 , . . Total 57,090',5 97,723:.1 86,840.0 79,11+8.1

Balance

Excess of expenditures over reoeipts 35,812.5 37,068'.1 32,009.0 13,526:.1

Source: Budget des Recettes et des Depenses pour I' Exercice 19L,.9·, Expose General.

19h9

59 Lr:'7"~ , .,-1 ~.,.

951.1

6,353.1

66,762.1

47,692.1

12,426.1

60,118.2

11,L:66.0

71, 581.r. 2

4,822;.]

• • TJu3LE VIII

Evolution of the Public Deb~ (In millions of Belgian francs)

Total debt

Inte:-nnl nebt External excluding Currency Total inclucling

Consolidated I~ledium deqt currency reform currency reform

Direct Indirect term Sho rt- t. e rm 1./ rRform loan loa.n

1938 December 26.525 9,066 1,300 3.782 6,560 47,233 47,233

1939 December 26,21JO 8?948 700 (,887 5~936 49,711 4-9,711

1940' April 26,462 BJ 901 700 11,465 5~645 53,173 53,173

1944 ,t\llgu st 3},649 8,122 37,4)8 61,922 4,082 145.213 145~213

1945 Decet1ber 44,375 7,953 31,843 115,34-'-1. 6,156 20.5,671 205 1 671

1946 Decemb..:~ 43,489 7,854 27,869 110,210 11,.717 201,139 5e,822 254-,4·61

1947 December 42,64·6 11.818 27,189 121,549 11,001 214,203 43.984 258,187

1948 January 42,608 12,020 27,751 122,625 10,908 215,912- 43,617 259,.529

February l!-2,551 12,062 27,584 124,725 10, 74L~ 217 .. 666 431136 260,.802

March 4-2,491 12,055 27,062 126,553 13,377 221,538 42.573 264,051

A:pril 42,441 12.045 27,318 126,726 13,,392 221~922 42,005 263.927

'May 42,399 12,069 2·7,101 126,461 13,511 221,541 41,527 263.068

June 42,341 12,162 30,685 122,552 1},426 221,166 L!·1.055 262,221

July 42,305 12,219 30,806 124,294 13,389 223,013 40,560 263,573

August 42,24.6£1 12,219 31,l:!96 123,29~ 1},410 222,670 40 .. 084 262,754

September 78,881 12~277 31.406 76,89 1},lB7 212 t 647- 39,636 2-52,283

1.l Not including the debt to foreign governments resulting from the 1914-1918 \-,ar. gj. On September 13, 1948,· accumulated I-~.ofits of the National Bf!n.'k "18re surrendered. to the Government.

The proceeds were used by the GO'vernment partly to increase its su:'scription to the ban..1t t s capital and partly to reduce its debt to the Bank. At the same time 35 billion francs of short-term obliga­tions still o~:!ed to the Bank ' •. rere funded into a long-term debt of the state (part of v!hich \",il1 be sloiYiy amortized out of the T·reasury share in future profits of the Ban.~) and the remaining 2,465 million short-term debt transformed into Treasury certificates in the Bank's portfolio.

Sou:re: Official figures.

Imuorts

Live animals Foodstuffs Rav! materials and semi-

manufactures Manufactured goods Gold and silver

Total

Exnorts

Live animals ]loodstuffs Raw Inaterials and semi-

manuf acture s Manufactured. products Gold and silver

Tcta1

• • TABLE IX

BelgiuIn-Lu.::~8JTlbourp: Foreip'n Trade by Qf'teo.;ories Accordin8; to the :3russels ~la.ssification (V~lues in millions of Be1eian francs)

1947 1938 1939 Value % Gf total Value % of total Value % of total

28 0.12 13 0.12 56) 0.66

4,677 20Q27 4·,006 20.22 19,74i') 23~O7

12,557 54 .• 43 10,7LI·6 54.24 34,019 39.76

5,336 23.13 4,630 2).37 30,621 35.79 422 2.05 406 2.05 616 0·22

23,069 100~OO 19,811 100.00 85~·559 100.00

67 0.31 53 .24 302 0.30 1,132 5·22 798 3.64 1,784 5.34

9,781 45.13 9,787 44.59 20.322 44.,71

10,.461 48.27 11,100 50.60 39,100 48,,52 211 1.02 203 .,9-1 Ih8 1.11

21,670 10OcOD 21~934 100 .. 00 61!655 100.00

Because of rounding, columns do not always add Ul) to totals.

19[!-8 Janunry-July Value ~ of total

182 0.36 12,497 24.52

21,963 43.10 16.030 31.46

284 o.c;6

50.95.3 lOOeOO

16 0.04 1,709 4.14

11,427 27.67 27,994 67.79

148 o. 36~

41,295 100.00

Source: Ministere des Affaires Economi~ues et des Classes Moyennes lnstitut National de Statistique.

• • TABLE :{

EXDort3 of the 391g:!-Luxembourg Eccnomic Union

(Values in millions of Belgian frencs)

I. Live animals and animal products II. Vegetable products

III. Fats and oils of all types1J IV. Food products, dri~~s, 1i~uids

vinegar and tobacco V. lJiineral products, i.e., iron ore

1I. Chemic81 and pharmaceutical pro­ducts

VII. Leathers, furs and skins and pro­ducts thereof

VIII. Rubber and rubber goods IX., Wood and cork 8nd wood and cork

products x:.. Paper and paper goods ~~ Textiles and textile products

Ready made clothes XII. Shues, hats and parasols and

articles de mode XILf .... \Yorks in stene and other minerals

Glass and glass1siTare XIV. Pearls, precio~s stones, precious

mete.1s and vJorks of same, money XV. Metals and metal ~nods

A-VI. i18.chines ~IJ.d apparatus, electrical material~ ~

XVII. Transport materials-"-I

VBlue

1,874 1,852

13

467 2.727

1,483

4,12

138

140 347

2,1~0

213

y 1,289

498

W 5,706

1.2.80 402

19'38 "". to t'f Total

8.7 8.5 0.1

2.2 12 0 6

6 .. 8

1.9 0.6

0.6 1 0 6 9.9 1,,0

5.9 2.3

26.3

5.9 1.9

Vsllle

1,274 2,298

8

11:'6 ...-.J

2,14-7

2,343

129 79

164 671

3,165 Z41

2! 2,685

941

1JJ 9.907

2,233 243

1946 ,,~

~0 of Tot~l

4.-3 7.7 *

11t2 7.2

7.9

0.4 0.3

0,,6 2.3

10.7 0.8

9.1 3.2

33.4

7.5 0.8

__ ..=.19!±2 Value % of Total

3,294 4,121

36

436 4.907

5,489

293 347

282 1,282 8,258 1,005

2/ 2,706 2,147

!Jj 19,763

4.726 946

5;3· . 607 0.-1-

0.7 7.9

8.9

0.5 0.6

0.5 2.1

13.4 1.6

4.4} 3.5)

32.1

7.7 1.5

- continued

194-8 January- Septembe r VR.llle <% of Total

h27 1,802

189

329 3,'392

5,079

390 311

246 671

10,086 }j

113 1,880

1,751 20,580

LL.,093 1,761

0.8 3.4 0.4

0.6 6.,3

9.5

0.7 0.6

0.5 1.·2

18."8

0.2 3.5

303 38.3

7.6 3.3

• • T}..J3LE X -- PHge 2

1)48 1~38 1946 ~ Janu8ry-September

Value X of Total Value % of Tot 81 VAlue ~ of Total Value % of Total

XVIII •. ' (Clocks: scientific and preci sion instruments

( lviusical il1strumegys XIX. Arms and munitions~ xx. rJii scellaneous (not elsov!here men­

tioned) XXl. Objets dfart

Totals

10 2

256

411

21,670

Totals do not add because of rounding.

0.1 21 • 9

1.2 129

lc9 611 ------.~-

29,654

0.1 45 0.1) 84 . 0.2 * 26 * )

0.4 297 0.5 352 0.7

201 1,204 1.9 40 Of'l 13 *.

61,609 53,658

Note: The system of classification was changed slightly in 1948 after the Benelux Customs Union went into effect. obvious incongrui ti(;l s in clas sificat ion are noted belo\-l.-

11 It is uncertain v.lhether or not these classifications incIude precisely the same goods in 1948 and previous

2J JJ !±/ 5./ §j

*

years fI

Included under the heading ready made clothes. In 1948. reedy made clothes are divided between textile goods and shoest hats, etc. In 1938, 1946 and 1947 tIlere is no cla.ssification similar to this. Prior to 1948, railroad materials and trains Vlere included in the classificEtion machines and apparatus. 1948 these have been included uith other transport :naterials. Prior to 1948, t:his classification onlv includes arms.

Less than one-half of one-tenth percent.

In

SO\l.rces: Annuaire Statistir::.ue de la Belgir;..ue et duo Congo BeIge 1946, Bulletin de Statistir:;.ue, and Bulletin Hensuel du ConEaerce de 1 'Union Economi,-:.ue J3e1go-Luxembourgeoise avec les Pays 3trangers.- September 1948.

• • TABLE X (Continued)

I:r.rpol'ts of the 3el£:o-LU:,,8r:tbourg ?:conomic Union

(Values in millions of Belgian francs)

I.. Live animals and animal pro duct s II.. Vegetable products

III .• Fats and oils of all types'V 1V_ Food product s ... drinks" liq,uids,

vinegar~ tobacco V-. iviineral products, i .. e •• iron ore,

coal, etc. VI~ Chemical and pharmaceutical pro­

ducts :v.Il.~ Leathers, furs and skins and goods

thereof VIII. Rubber and rubber goods

IX. Wood and cork and productr of vlood and cork

x.. Paper and paper goods XI. Textiles 2nd textile products

Ready made clothes XII ~ Shoes., hats and parasols)

articles de mode ) XIII. ~iorks in stone and other minerals.

pottery Glass and glassware

XIV.. Pearls, l?recious s-'Gones, precious metals 8.nd 'lrlorks of same; moneys

XV. Metals and metal goods

___ l.9.18 Value % of TotRl

2,745 5,842

17

1,149

4,952

820

162 72

781 591 698 175 Y

227 53

~ 2,402

11.9 2503 0.1

5.0

21.5

3.6

'0.7 0.3

3.4 2.5 3.0 0.3

1.0 002

10.4

1946 Value % of Total

6,479 8,858

'111

5,939

7,939

2,147

603 238

1,270 1,836 2,615 1,200

£/

331 117

!±J 4,225

12·.3 16 .. 9

0.,2

11.3

15.1

401

1.1 0.-5

2.4 305 5 .. 0 2.3

0.6 0 .. 2

8.0

1947 V.9.1ue % of Tot8..l

9,284 16,288

1 1"),., t:..(

7,363

13.4)6

3,193

915 594-

2,172 2,596 4,189 2,306

Ed

514 282

!±/ 7,564

10.9 19.0 0.1

8.6

15.7

3.7

1.1 0.7

2.5 3.0 4.9 2.7

o.~) 0.3)

8.8

- continued

1948 JanunrY-September Value % of Tot~l

5,.560 8.8q'5 1~119

3,744

10,443

3,026

1,115 484

1,78() 1,648 8,738

JJ. 250

648

5,788

8.5 13.-5 1.7

5.7

16.0

4.6

11,7 0.7

2.7 2.5

13.4

0.4

1.0

8.9

.I:V1 0 J.~~?-chines er;.cl ap i?ar3tus. electrical materialss...

XVII •. Transnort ~aterie~s2J XVIII. (Clocks: scientific and :pr~cision

instruments ._ _ (Musical ins~~mel1tt, AIX. Arms and mun]. tJ.ons QJ

XX. Miscellaneous (not else"There in-cluded)

.XXI. Objets dtart

Totals

• Value

1,231 722

120 20 19

272

23.069

Totals do not add because of rounding.

• TABI,m X (Continued) - page 2

1918 1246 9~ of Tot~l VBlue % of TotAl

5.3 1-1-,425 8.4 3.1 2,535 4.8

0.5 534 1 0 0 0.1 55 0.1 0.1 2 * 1.2 1.103 2.1

52,562

1948 _ 1247 J8nuary-Se~tember

VFl1ue ~ of Total Value % of Total

6.546 7.7 5,307 8.1 5,442 6.4 3,893 6.0

773 0.9) 768 1.2

85 0.1) 4 * 2ll *

1,854 2.2 294 * 22 0.4

85,527 65,)44

l~ote~ The system of classification ;:!as changed slightly in 1948 after the Benelux Customs Union ':Jent into effect. Obvious incongruities in classification are noted belo\.,.

11 Y 11 !±J 51 §j

•

It is uncer·tain 1t.Jhether or not these classifications include precisely the same goods in 1948. and previous years.

Incl-u.ded under the heading ready made clothes. In 1948, ready made clothes are d.ivided beti:Jeen textile goods and shoes, hats, etc. In: 1938, 1946 and 1947 there is nc classification similar to this. Pr.io~ to 1948,. railroad IDeterials and trains v!ere included in the c18ssifiC8tion ~achines and ap1?2rC'tus.. In 1948 .-

these have been included VJi th other transport materials. Erior to 1948. this classification only includes arms.

Less than one-half of one--tenth percent •

Sources: Annuaire Statisticue de la i3elgiClue et du Congo BeIge 1946 t Bulletin de Statisti(:.ue, and Bulletin Mensuel du Commerce de 1 'Union :.;;'conomi':118 Belgo-Luxembourgeoi se avec les Pays Etrangers. September 1948.

'rJ$1E X~

Belgia~ Gold ~~ Fore~gn ~):c.h&~~_Ho~~M..

(millions of U.S. dollars)

National Ban.1<: Treasury Short Tern:

End of --ForeIgn- Assets in Period Gold Exchang~_ Total Gold Total _:the .~.~ ~?_!.. __ -- ,.~.--

1937 765 765 63 633 1938 729 C) 738 44 782 ".

1939 714 2 716 17 733 159 19hL 732 1'1 7~-5 17 762 12h 19·4;; 716 84 800 17 817 185

• 1946 735 139 874 874 160 1947 597 291 868 688 125

1948 - January 593 311 90J.j. 90L~ 12h February 578 294 673 873 126 March 591 312 903 903 149 April 606 288 89L~ 89h 123 lJlay 615 287 ~~Ol 901 134 June 622 284 906 906 125 July 637 263 901 901 122 August 643 269 912 912 11h September 6h3 272 915 915 117 October 6h4 239 933 933 ... November ;~4 b ..... 297 931 931 • ••

• Source: Interna.tional Financial Statistics

•

•

TABLE XII ----.-. ... ,,-.-...,.

Total Interest and i~mortization Payments , ~xter~a~Deb~ of~Belgium

on

(Expressed in ~housands of U.S. dollars)

U.S. Canadian Swiss Swedish Dutch T Grand :!'~

Dollars Dollars Francs Kroner Florins S~~£~1-ng Tot.:-;.l I ..

1949 26,991 L,.,076 2,478 319 279 2,723 36,C66 1950 20,979 4,009 2, L~78 319 279 2,723 30,?37 19S;1 23,090 ~ 94'" 2,478 319 279 2,723 32,531 ..-, .-1952 23,217 3,875 2,478 319 279 2,723 32,691 195'3 18,711 3,808 2,L.78 319 279 2,723 28, ~13 1954 14,345 3,741 2,478 319 279 2,723 23,[;85 1955 lL~ . L~16 3,674 2,h78 319 279 2,723 23, Sa9 1956 14~913 3,607 2,LL7S 319 ?.79 2,723 2LI,319 1957 15,743 3,540 2,L78 319 279 2,723 ,...c 08" t:../ , t...

1958 16,419 3,Lt73 2,478 319 279 ?,723 ?S,691 1959 16,225 3,h60 2,478 319 279 2,723 2c:' l.Q4 -,J, ,'.1 1960 16,05'4 3,339 1,,23~ 319 279 2,723 23,:75.3 1961 15,880 3,272 319 279 1,627 21,377 1962 15,693 3,20.5 279 1,627 20,o04 1763 15,506 3,138 279 1,627 20,550 1964 15,320 3,071 279 1,627 20,297 1965 15,131 3,004 279 1,(;27 20,01..\.1 1966 11,944 2,937 279 1,627 16,787 1967 11,862 2,8ho 279 1,627 16,608 1968 11,781 2,803 279 1,627 16,490 1969 11,698 2,736 279 1,627 If),3LO 1970 11,616 2,669 279 1,627 16,191 1971 11,.533 2,602 279 1,627 16, oL~l 1972 11, l~.52 2,535 279 1,627 15, ~'93 1973 11,369 2,468 279 1,627 15,?4.3

Note: In addition to the ECA loan already g.cantej C';:h7 million), it heB been as sumed that furthe r loans of s:,40, ·.;;>35 and '1I;3!) milli.on v,-ould be granted in the remaining years of the ERP.

Source: IBRD"

•

•

TABLE X!li

Belgium-Luxembo~rg Balance of }'7:ymel1t~ £.n Current ACf:!OUllt ~91+1!

(In ~illions of Belgian francs)

'"#'

Receipts Payments

Current transactions M~rchandise Tr. 0'. b. ) 60;6·70 78, L~67 Non-monet.ary gold (net) }.~7 Foreign travel 1,713 1,419 Transporte.tion 1,855 6,217 Insurance 224 1,361 Investment income 1,456 / 1,313 Government 2,954£ 522 klisce11aneous 5,555~/ 849 Donations 2,662.~ 329

Total current tra.nsactions 77,096 90,521+

Financing the Defici~ or:.....Current Acco~nt

Net balance on current account Autoriomo-uscapi tai'traDSact:Lons

rrivate capital move:nents (1l1ainly repatrj.ation of capital and arrears)

Gold subscriptto:l to TIviF Amortization and other contractual repayments

Errors and omissions Compensatory financing -"FInancing of Belgian exports

Loans granted by Belgium Increase in Belgian holdings of inconvertible currencies

Financing of Belgian imports Loans granted to Belgium Decrease in Belgian holdings of convertible currencies Ib~ advanGe to Belgium Decrease in Belgian gold holdings

Balance .....--_ .. _--

-17,797 ~ ~.7

t

f 29h - 4,362 - 1,137 I- 143 .j. 2,432 .j. 14-; 706 [1,340

-13,428

1-10;755 - 2,h80 _?~h

- 6,137

f. 377

- 2,2.30 - l,Lj63 --.-.--.:. 9, h53

.;. 1,354

.;. 1,h83

.;. 483

.;. 6,133

.j. 9,453

1/ Based on BP 1 form s1.lbmi tted to the I ,H.f. 2/ Of which BF 2.650 mi~lion of allied payments for military expenditures. II Of vn1ich BF 2~027 million of personal anq institutional remittances.

•

•

TABIE XIV

Be1gi~n Investment 'f):ogr~

1. Public services Communications 1,119 1,250 840 Public works 2~865 h,GOO ~,673 Army 588 650 )1? Public offices 1,874 2,750 2,7Lo Forts (Antwerp and Ghent) 262 1,000 950 Hail:c'oads 2,733 4,500 II ~60 r...,., ....

Streetcars 83 200 126 leleg:.n aph, telephone ..h293 --2.00 _e8~

10,,617 16,050 15,089

2. Private ser,\1'ices Road transportation 2~600 '1 ?7 C 1,275 ,- ./

Interior wa,:ter tl"anSpOr0a tion 200 200 200 Merchant marine 1,214 1,2)0 1,250 Aviati.on 200 1'20 12G Streetcars and busos 8L~ 150 150

Coal rllines 1,300 2,100 1,800 Electric power 1,h51 2,700 1,96() Coal chemistry Soo "150 440 Steel iadustry 750 1,lGO 720 Iv:e tal manufac ture s 1,220 1,250 1,?50 Other • 1 J.. • ~., 18C) 1.j.,550 l.~, ~QO lnc.uS : ... rl8S Commerce 1,000 700 700 Agriculture ?OO 1,SOO 1, ;/00

Hous.ing 6,500 8,500 n ";C:OLI/ v,I/\ _

I.liscellaneous _ 1, 28L. --- ----r;?otal 23,3f3 26, lL~5 24,L15

1/ Investments made in 13€lgium in 1947. ';),-1 Yec~rl:T r04uirements during the first few yecY's of recovery_ 3/ I;stimated average annual requirements for the perj.od 1948-19S7, Y This table is annexed to the 11hird lteport on Invest1uents recently

issued by the ~.jj.nister of L,conomic Coordi:a:::.tion and iJatio;'1al He­equipment. (The rel10rt is not available in v~ashington but tho t(1)le was reproduced in the Belgian r.i:raue i~eview for Nov6uber, published by the Belg:tan Chamber of Conrmerce in the United States, Inc. 'There appears to be a t':lPo~raphical error in col.umn (3), since tiLe :Lndi­vidual items do not add up to the total. The error is obviously in the figqre for housing vrhich is BF 850 mil:'.ion compared 'wi th BF 0,750 million in the 08cond Report. The latter figure has been substituted, but llsing it, the column does not add up exactly to the total.