March 2009 Flanders Economy and Public Finances
Mar 29, 2015
March 2009
FlandersEconomy and Public Finances
2
Agenda
I. Economy
II. Public Finances
III. Financing
3
Capital Brussels
Language Dutch
Surface 13 684 km²
Population 6 117 440 (2007)
Density 447 hab./km² (2007)
Currency Euro
N° of Companies 509 300
Nominal GDP EUR 200 bn (2008)
GDP/Capita EUR 30 500 (2008)
Income/Capita EUR 33 300 (2008)
Economy
Main Facts & Figures
4
Economy
Strong Economic Fundamentals
Flanders benefits from very strong economic fundamentals. Despite the current virulent economic
crisis, most economic indicators should remain sound and encouraging in the coming years.
Flanders France Germany Netherlands EU - 27
Unemployment Rate* 4,0% 7,3% 7,9% 2,8% 7,0%
Real GDP Growth Rate 1,3% 0,7% 1,0% 2,1% 1,1%
(*) Q3 2008 figures
Source: Eurostat
5
Economy
Stands Out from its Peers
(2007 figures) Flanders Baden-Wuerttemberg
Bavaria Catalonia (region of)
Hesse Madrid (region of)
North Rhine-Westphalia
Credit rating (S&P/M/F)
AA+ AA+/Aaa/AAA AAA/Aaa/AAA
AA/Aa2/A+ AA/-/AAA AA+/Aa1/AA AA-/Aa1/AAA
Country Belgium Germany Germany Spain Germany Spain Germany
Population 6,0 m 10,7 m 12,5 m 7,2 m 6,0 m 6,0 m 18,0 m
Unemployment rate
4,4% 4,9% 6,2% 6,6% 7,7% 6,3% 9,4%
Operating balance (% of operating revenues)
7,8% 3,5% 9,0% 7,8% -1,0% 14,4% -1,0%
Balance after capital exp.
2,7% -1,4% 1,4% -6,5% -2,3% 3,1% -8,4%
Total Revenues (EUR billion)
22,875 34,267 38,253 22,109 20,386 17,583 47,514
Direct debt (% of operating rev.)
1,2% 129,1% 65,9% 59,1% 160,1% 31,1% 254,9%
Source: S&P, Moody’s, Dexia Capital Markets Research
Gov
ern
men
t
6
Economy
An Economy based on Trade and Services
Source: Institute of National Accounts (2006)
Secondary Sector28%
Primary Sector
1%
Tertiary Sector71%
• Real Estate and Business
Services: 24%
• Wholesale and Retail: 14%
• Transport: 8%
• Health Services: 7%
• Construction: 6%
• Chemicals: 4%
• Iron, Metal & Steel: 3%
• Food & Tabacco: 3%
7
Economy
Strong GDP Evolution
Source: Eurostat, Study Office of the Flemish Government, nominal figures
0
50
100
150
200
250
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
EUR (billion)
8
Economy
High GDP per Capita (2008)
Source: Eurostat, Study Office of the Flemish Government
20
22
24
26
28
30
32
34
Flanders Belgium France Netherlands Germany UnitedKingdom
EU-15 EU-27
EUR (thousands)
9
Economy
Low Unemployment Rate
Source: Eurostat, Study Office of the Flemish Government
0
2
4
6
8
10
12
Flanders Belgium France Netherlands Germany EU-15 EU-27
2003
2004
2005
2006
2007
%
10
Economy
Flanders’ Employment: Resilient in Periods of Crisis
Economic Growth and Employment in Flanders, 1981 - 2008
-2
-1
0
1
2
3
4
5
6
7
1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
1 900 000
2 000 000
2 100 000
2 200 000
2 300 000
2 400 000
2 500 000
2 600 000
Real % GDP growth (left scale) Total employment (right scale)
Years of Economic RestructuringGerman unification and preparing for the
Maastricht criteria
Reorganisations after investment hausse and dot.com hype
Source: Eurostat, Study Office of the Flemish Government
%
11
Economy
Flanders’ Key Strengths
• Located in the heart of Europe
• Unique European hub
• Strong export-driven economy
• Diversified base of trading partners
• Foreign direct investment figures & trading partners
• Diversified economy
• Highly qualified workforce
• R&D competence center
12
Economy
Located in the Heart of Europe
Flanders lies at the center of the EU’s
wealthiest and most populated area –
and Flanders has the highly
developed transport and
communications systems required for
companies to take full advantage of
this fact.
13
Economy
A Unique European Hub
Flanders offers companies rapid and efficient
supply and distribution links with other major
European centers and beyond.
Leading ports Antwerp, Ghent, Ostend, Zeebrugge
Airport freight & logistic hubs
Brussels, Ostend
Extensive inland waterway system
Linking into the European system
High density of freeways
Connecting directly to other European countries
High density rail network
Dedicated freight lines to other parts of Europe
14
Economy
Increase in Flemish Exports (EUR billion / Nominal Figures)
146
191178
169158
0
50
100
150
200
2003 2004 2005 2006 2007
Regional Distribution of Belgian of Belgian Exports (%)
Flanders81%
Wallonia17%
Brussels2%
Strong Export-Driven Economy
The Flemish economy is strongly export-oriented, in particular in the areas of food, beverage,
automobiles, iron and steel. Flanders’ exports represent over 80% of Belgium’s total export in
volume.
Source: Institute for the National Accounts (National Bank of Belgium)
15
Economy
Diversified Base of Trading Partners
The Flemish export markets have traditionally been focused on Western Europe and more
particularly on Germany.
TOP 10 Flemish Export Markets in 2007 (in EUR billion and as % of total)
16.8%
13.9% 13.6%
7.9%
4.9% 4.4%4.0% 2.7% 1.8% 1.8%
0
5
10
15
20
25
30
35
Ge
rma
ny
Ne
ther
lan
ds
Fra
nce
Un
ited
Kin
gdo
m
Ita
ly
Un
ited
Sta
tes
Sp
ain
Ind
ia
Sw
ed
en
Po
lan
d
Source: Eurostat, Study Office of the Flemish Government
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Economy
Foreign Direct Investment Figures & Trade Partnerships
Top 10 biggest investors (in 2007, total =100)
1 USA 22,8%
2 Netherlands 16,9%
3 UK 9,1%
4 Germany 5,8%
5 France 5,2%
6 Sweden 5,2%
7 Japan 4,6%
8 India 3,9%
9 China 3,9%
10 Denmark 3,2%
Flanders has a proven track record of welcoming
foreign businesses to its region.
Life Sciences Johnson & Johnson, Pfizer, Schering-Plough, AstraZeneca, ...
Automotive Ford, General Motors, Volvo, …
ICT Alcatel Lucent, British Telecom, Philips, ST Microelectronics, ...
Chemicals BASF, Total, Suez-GDF, Bayer, Kaneka, Nippon Shokubai, ...
Food Products Heinz, Procter & Gamble, Tropicana, ...
Logistics Caterpillar Logistics, Deutsche Post, NYK, ...
Source: Eurostat, Study Office of the Flemish Government
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Economy
R&D Competence Center
Share (%) of workers in knowledge intensive sectors
02468
10121416
Fla
nd
ers
Fra
nce
Th
eN
eth
erl
an
ds
Ge
rma
ny
EU
-27
Source: Eurostat, Study Office of the Flemish Government (2006)
Share (%) of GDP invested in Research & Development
0
1
2
3
Fla
nder
s
Fra
nce
The
Net
herla
nds
Ger
man
y
EU
-27
18
Economy
Education: Flanders on Track for the Future
Source: PISA 2006, Average country scores
Top countries
Finland 563 Korea 556
Hong Kong China 542 Finland 547
Hong Kong - China 536
Excellent countries
Canada 534 Chinese Taipei 549 Canada 527
Chinese Taipei 532 Finland 548 Flanders 522Estonia 531 Hong Kong China 547 New Zealand 521
Japan 531 Korea 547 Ireland 517
New Zealand 530 Flanders 543Flanders 529Australia 527
Netherlands 525
Korea 522
Liechtenstein 522
Average46 countries! 53 countries! 50 countries!
Germany 516 Netherlands 531 Netherlands 507
United Kingdom 515 Germany 504 United Kingdom 495
France 495 France 496 Germany 495
United Kingdom 495 France 488
Scientific literacy Mathematical literacy Reading literacy
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Economy
Flanders in Action
A well-defined plan to make sure that Flanders will be in the
top five of the European regions by the year 2020 carried by
all social groups in Flanders
To ensure and assure the region’s future by developing it into
an innovation-driven, ecologically sustainable and socially
welcoming society
Vision & Ambition
Goal
20 Concrete Objectives Examples:
• Increase of R&D from 2,1% to 3,0% of GDP
• Double number of participants in lifelong learning
programs
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Economy
Countering the Economic Crisis in the Nearby Future
Measures already taken• Capital injection in financial sector (KBC, Dexia, Ethias)
total investment of EUR 3 000 million
“Restore Confidence” plan• Strengthen the granting of credit and capital to companies
- new SPV set up which provides company guarantees (EUR 300 million) - launch of XL-fund to provide growth capital for companies
• Enhancement of the activation policy on the labour market • Speed up investments
- accelerated release for investments in infrastructure (EUR 180 million) - strengthening of the public-private investments (e.g. school buildings) total indicative budget of EUR 842 million
Special measure to increase purchasing power (in February 2009) total budget of EUR 710 million
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Agenda
I. Economy
II. Public Finances
III. Financing
22
Public Finances
Belgium Federal Structure
Federal State
10 Provinces
3 Regions:FlandersWalloniaBrussels
589 Towns and Cities
3 Communities:FlemishFrenchGerman
The Flemish Community and the
Flemish Region decided to merge
their competences.
As a result, Flanders has one Flemish
Parliament, one Flemish Government
and one public administration,
responsible for community and
regional matters.
23
Federal State
Public Finances
Competence Distribution
•Public Finances•Defense•Security•Justice•Social Security•Public Health•Domestic & International politics •Transport &
Communication
Flanders
Flemish Community
•Education•Culture•Public health
(prevention)•Welfare•Language issues•Child protection
Flemish Region
•Economic development & co-operation•Public infrastructure•Town & country
planning•Environment•Energy•Employment•Agriculture•Foreign Trade•Regional transport•Control & organization of local governments
24
Public Finances
Revenues by Segment
Specific allocations
4%
Regional taxes20%
Others1%
Combined and shared taxes
75%
0
5 000
10 000
15 000
20 000
25 000
30 000
2009 2010 2011 2012 2013 2014
Combined and shared taxes Specific allocations Regional taxes
Allocated income Other funds Credit grants and participations
Source: Flemish Community, Department of Finance and Budget (2008)
Combined taxes are part of Belgium’s personal income tax levied in Flanders.
Shared taxes are part of Belgium VAT and transferred at endowment to Flanders.
EUR (million)
25
Public Finances
Breakdown of Public Spending
Finance and Budget
5%
Culture,Youth , Sports and
Media5%
Education and Training
37%
Rest9%
Economy, Science and Innovation
4%
Administrative affairs10%
Work and Social Economy
6%
Mobility and Public Works
12%
Public Health and Family
Welfare12%
0
5 000
10 000
15 000
20 000
25 000
30 000
2009 2010 2011 2012 2013 2014
Education and Training Public Health and Family Welfare Mobility and Public Works
Administrative affairs Rest Work and Social Economy
Finance and Budget Culture,Youth , Sports and Media Economy,Science and Innovation
Source: Flemish Community, Department of Finance and Budget (2008)
EUR (million)
26
Public Finances
Flanders Sustaining Belgian Financial Stability
Source: Institute of National Accounts (National Bank of Belgium)
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
-600
-400
-200
0
200
400
600
800
1 000
1 200
1 400
Balance to be achieved (left scale) Realizations (left scale) Difference between balance and realizations (right scale)
EUR (million) EUR (million)
27
Public Finances
History of a Healthy Budget…
Source: Flemish Community, Department of Finance and Budget
EUR (billion) EUR (million)
0
5
10
15
20
25
30
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
*
-1 000
-500
0
500
1 000
1 500
Revenue (Left Scale) Expenditure (Left Scale) Balance (Surplus/deficit) (Right Scale)
(*) Without redemption of local debt (EUR 650 million) and capital injection in Dexia & Ethias (EUR 1 000
million) in 2008
28
Public Finances
…has led to zero-debt in 2008
0
1
2
3
4
5
6
7
8
9
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Flanders’ debt management policy has achieved remarkable debt reduction in the past two decades to virtually no debt at regional level at the end of 2008. In addition: extra redemption of local debt (EUR 650 million).
Source: Flemish Community, Department of Finance and Budget
EUR (billion)
29
Agenda
I. Economy
II. Public Finances
III. Financing
30
Financing
Credit Profile: Key Points and Major Strengths
Flanders benefits from:
• Solid financial position on a consolidated level
• Prudent and sophisticated management
• Low regional debt. The total debt/total revenue ratio has constantly decreased from 44% of the revenues in January 1999 to nearly 0% in December 2008.
• A strong taxable basis with a GDP around EUR 200 bn.
• A wealthy and diversified economy
• Sound budgets despite cyclical economy
• A strong educational system
• Strong financial ratings
31
Financing
Main Terms & Conditions
Issuer Flemish Community (and Region)
Rating AA+ (S&P)
Rating Outlook Stable (S&P)
Currency EUR
Amount Up to EUR 2 bn
Coupon Format Fixed Rate
Issuance Format EMTN Programme
EMTN Programme Size EUR 10 bn
Issue date March 2009
Maturity [3-5-8] yr
Listing Euronext Brussels
Documentation ICMA Standard
Governing Law Belgian
Joint-Bookrunners DEXIA, HSBC, ING, KBC, SG
32
Contacts
Hedwig Van der BorghtSecretary – general
Flemish Community, Department of Finance and Budget+32 2 553 54 09
Luc KeeremanHead of financial management division
Flemish Community, Department of Finance and Budget+32 2 553 54 34
mailto:[email protected]
33
Disclaimer
This presentation has been prepared by Flanders for informational purposes only. Although the information in this presentation has been obtained from sources which Flanders believes to be reliable, we do not represent or warrant its accuracy, and such information may be incomplete or condensed. This presentation report is not intended to provide the sole basis for any evaluation of the transactions discussed herein. All estimates and opinions included in this presentation constitute our judgment as of the date of the presentation and may be subject to change without notice. Changes to assumptions may have a material impact on any recommendations made herein. Flanders will not accept any liability whatsoever for any loss howsoever arising, directly or indirectly, from the use of this presentation or the information provided for in this presentation or otherwise arising in connection with this presentation.
This presentation is confidential and is provided to you for information purposes only and does not constitute a public offering or an investment service in Belgium. This presentation is being submitted to selected recipients only and neither this presentation nor any other offering materials may be distributed, published or made available to the public in Belgium. This presentation may not be reproduced or passed on (in whole or in part) to any other person than the selected recipients. Neither this presentation nor any offering materials may be used in relation to any investment service in Belgium unless all conditions of directive 2004/39/EC, as implemented in Belgium, are satisfied. Neither this document nor any offering materials can be used to publicly solicit, provide advice or information to, or otherwise provoke requests from, the public in Belgium in relation to the offering. Any offering in Belgium is made exclusively on a private basis in accordance with article 3 of the Belgian law of 16 June 2006 on the public offering of investment instruments and the admission of investment instruments to the trading on a regulated market.
© March 2009 Flanders. All rights reserved.