Dexia recap to push Belgium over deficit limit: EU

A 5.5-billion-euro state recapitalisation of the failed Belgian-French bank Dexia would drive up 2012 public deficits for both countries and push Belgium above the EU limit, its statistics office said Tuesday.

In a letter sent by Eurostat to Belgium and France and seen by AFP on Tuesday, the aid was considered by accountants a "transfer of capital" from the state that "must be logged in the 2012 accounts" for each country.

The European Commission said it would study the impact of the Eurostat assessment to see if its recently-published Spring economic forecasts needed to be revised.

In Belgium's case, the European Union executive envisaged a 0.8-percent increase in the public deficit, which means the country would miss its target of 2.8 percent of national output and cross the 3.0-percent EU threshold.

Eurozone countries are bound to maintain public deficits of no more than 3.0 percent of gross domestic product (GDP) and are supposed to work towards a balance or even a surplus in times of economic growth.

For France, the increased burden would rise its public deficit by 0.1 percent of GDP.

Belgium's nominal share of the recapitalisation is 2.9 billion euros ($3.8 billion), while France is to chip in 2.5 billion.

Belgium wants to modify the percentage of burden shared with France, however.