IMF URGES BELGIUM TO MAKE FURTHER SPENDING CUTS The Belgian government, which introduced large-scale public spending reductions last year, has been told by an International Monetary Fund team there is scope for further cuts in 1988. The suggestion is contained in the preliminary conclusions of the annual IMF consultations with Belgium on its economic policy, a copy of which was distributed to journalists at the weekly press conference following meetings of the cabinet. The IMF team also urges Belgium to adopt a firm interest rate policy, with a particular emphasis on long-term rates. The team's report to the government praises last year's spending cuts, which are due to reduce 1987 government spending by 195 billion francs, and says 1986 saw the Belgian economy perform "better, on a broader basis, than at any time so far in the 1980s." However, it adds that with lower inflation, stabilisation of the debt to gross national product ratio requires a much lower budget deficit than the seven pct of GNP target the government has set itself for 1989. The government's net financing requirement was 11.0 pct of GNP in 1986. The report says "The most that can be afforded over the next few years is a zero growth of real non-interest expenditure of general Government." It says there is a need for a revision of the Belgian tax system to iron out distortions and meet hopes of a reduced tax burden but substantial progress is needed in stabilising the debt to GNP ratio before this is possible. "Because of the difficulty of sustaining zero expenditure growth and of likely growing impatience (for) tax reductions, we feel that your position would be stronger if you could decide on rather sharp expenditure reductions in 1988," the report adds. The IMF urges a strong interest rate policy to signal the government's determination to keep its currency strong and to curb inflation. It says firmer long-term rates would slow private net long-term capital outflows, which increased strongly in 1986. It also urges net repayments of foreign currency debt and an overhaul of domestic capital markets to facilitate the subscriptions by non-residents of government bond issues in Belgian francs.