The problems of the Gemeentelijk Holding (GH) are caused in large part by the dismantling of Dexia Group and the nationalisation of Dexia Bank Belgium. The GH is one of the main shareholders of Dexia, with 14.1%.

The GH, in turn, is made up of the municipalities of the country, with 39.8% in the hands of Flemish municipalities. On the books of GH, Dexia shares are worth €8.50. At the time of writing, the shares were worth 61 cents, representing a total loss to the GH of some €2 billion. The GH is now effectively insolvent: It does not have the assets to cover its debts. The deficit is estimated at about €900 million, and the problem for the federal and regional governments is to avoid bankruptcy.

Part of Peeters’ request was for the National Lottery, which is under the control of the federal government, to be given permission to reschedule two loans that the GH was due to repay this week, one of €5 million and one of €17 million. That would give the GH breathing space to undergo what he referred to as a “controlled liquidation”. As far as Peeters is concerned, the GH no longer has a reason to exist, now that Dexia has been taken over by the state.

The idea of delaying debt repayments is backed by the other two regions, and Brussels Region has rescheduled a GH loan worth €30 million that fell due on Tuesday. Speaking on VRT radio on Monday morning, Peeters said a compromise proposal tabled by Walloon minister-president Rudi Demotte had been hammered out in talks at the weekend among experts on the division of GH debts, but that the federal government had declined to give it the green light.

“If an agreement is technically possible, why is it not politically possible?” Peeters asked. The federal position, he said, was “incomprehensible” if the goal was to avoid allowing GH to go bust. The regions want the €900 million GH deficit to be split: half for the federal government and the other half divided among the three regions. The federal government, on the other hand, wants the regions to write off the €450 million they put up as guarantee in 2008, and then for the remaining €450 million to be divided in two: €225 million for the federal purse and €225 split between the regions.

The regions are not ready to agree to that. In his address to the Flemish parliament last week, Peeters pointed out that the government had pressed the Flemish Region in 2008 to step in with guarantees to shore up Dexia. It had also pressed GH to increase its shareholding. Flanders and the GH had each, as a result, put in €500 million. The Flemish Region’s contribution fell short of allowing it a director on the Dexia board. The federal government, however, also provided guarantees of 60% on an injection of €150 billion, did gain the right to a director.

As Flanders Today went to press this week, a rescue plan had still not been agreed, though the GH decision to announce their conclusions on Saturday suggests they have some assurances from the federal government that, in the meantime, the two National Lottery loans will not be called.