A drastic change in economie and monetary policy, which started in 1982, has up to now resulted in a normalisation of the rate of inflation and the balance of payments. However, the growth rate of GNP is still low and unemployment high. Budget deficits, public debt and related interest payments are in proportion to GNP between the highest in the industrialised world. Economic events and political constraints hampered the efforts of the government to restore the situation. In 1986 a new plan was introduced and approved by Parliament, confirming an important cut in public expenditures. The existing burden of taxation already leads to a series of negative effects and a small open economycannot stay indifferent against the international movements towards lower taxes. So a tax reform in Belgium can only mean a restructering, leading to a decrease in personal income tax, largely compensated by an increase in indirect taxes. Further cuts in primary public expenditures will be unavoidable, but have to take into account, more than in the past, the repercussions on economie evolution in the long run.

The political agenda for the first year of governing of the second autonomous Fiemish government in the history of the Belgian state, was dominated by the debate concerning the additional financial resources and authorities for the communities and regions. The immediate cause for this, was the extensive saving-plan (Saint-Anna plan) of the national government, which also hit the communities and regions. The final outcome of the debate was the so-called Saint-Catherina agreement, which not only provides a number of savings, but also the transferring of a series of public services and scientific institutions to the communities and regions. A project of decree was agreed to by the Flemish government, which creates a legal scheme for the foundation of a private TV-station in Flanders. In this way they want to cease the monopoly of the publicbroadcasting station «BRT». The bill would only pass the Flemish Parliament in 1987. A number of issues lead to tensions between the Christian-Democrats and the Liberal coalition partners, issues like the affection of green areas around the Brussels agglomerate or the construction of golflinks in Flanders. This contribution ends with a review of a number of important decisions made by the Flemish government on various subjects.