Belgian government breaks deadlock over renewal of central bank governor mandate

The parties in Belgium’s coalition government have reached an agreement to renew Pierre Wunsch’s mandate as governor of the National Bank of Belgium (NBB).

The agreement was reached at a meeting attended by government ministers, a Belgian official, speaking on condition of anonymity, told POLITICO. The renewal will allow Wunsch to participate at next meeting of the ECB Governing Council on January 25, avoiding international embarrassment for the country, which took over the rotating presidency of the EU Council at the start of the year.

The government had failed to meet a deadline for extending Wunsch’s term at the beginning of this year amid political wrangling over other appointments within the administration between the seven parties that make up Prime Minister Alexander De Croo’s government.

Last week the NBB’s Council of Regency asked Wunsch to stay at the helm of the bank temporarily as a caretaker until the government was able to break the deadlock. The bank had condemned the political impasse, calling the situation “highly exceptional” and saying that “this temporary solution is suboptimal [with] regard to the principle of central bank independence enshrined in European law.”

This will be a second five-year term for Wunsch, one of the most hawkish members on the ECB’s Governing Council. Governors are appointed by the monarch on a proposal by the government. Their terms last for five years and can be renewed until retirement age.