* King seeks broader caretaker govt
* Asks acting PM again to present 2011 budget
* Impasse lasted record of more than 7 months
(Adds palace statement, background)
By Robert-Jan Bartunek
BRUSSELS, Feb 2 Belgium's King Albert II asked
acting Prime Minister Yves Leterme on Wednesday to present a
2011 budget and widen the caretaker government's powers while a
political deadlock drags on.
The king also asked acting Finance Minister Didier Reynders,
a French-speaking liberal, to mediate in efforts to form a new
government in the linguistically divided country after the
Dutch-speaking Flemish majority rejected previous compromises.
Belgium has been in political limbo since a parliamentary
election on June 13, raising concerns in financial markets it
will be unable to rein in a public sector debt approaching the
size of its annual output.
A palace statement said the king had asked Leterme to
present a budget for this year and take required measures "to
answer soon European demands regarding budget policy and
structural reforms in the coming years".
"The king has also asked the prime minister that the
caretaker government should take all social, economic and
financial measures to guarantee the welfare of the people," the
Meanwhile, Reynders will have two weeks to see whether a
compromise can be reached on the main issues on devolution of
more powers to the regions holding up the talks, and will report
back to the king on Feb. 16.
ANALYSIS: Pressure mounts on Belgium [ID:nLDE7060RH]
COLUMN: Belgium could be game changer [ID:nN1088581]
Q&A: Why Belgium can't form a government [ID:nLDE70B1V9]
The request followed up on the monarch's unusual call last
month for Belgium to draft a tighter budget than one already
agreed with the European Union. [ID:nLDE70917R]
The current plan for a deficit of 4.1 percent of annual
output (GDP), although likely to fall below the euro zone
average, had not been enough to calm financial markets.
Belgium's public debt rose to 97.2 percent of GDP last year and
is set to edge up to 98.1 percent without additional measures.
Ratings agency Standard & Poor's warned the country late in
December that it could lose its AA+ rating if it failed to form
a government within six months [ID:nLDE6BD1B6].
The premium investors demanded for holding 10-year Belgian
government debt versus benchmark German equivalents approached a
euro lifetime record of 149 basis points in January, although
has steadily fallen in recent weeks to around 80 now.
Leterme's plan to cut the deficit to below 4 percent and the
prospect of an expanded euro zone rescue fund have eased market
The deadlock has now run 234 days, a record in Europe. One
website (lerecorddumonde.be/) is counting down the time
the impasse would need to continue for Belgium to pass the
current world record of 289 days held by Iraq.
The stalemate is the result of demands from Dutch-speaking
parties to give more powers to their region of Flanders and
resistance from French speakers who fear devolution could lead
to the end of the 180-year-old country.
A previous mediator, former Flemish Socialist leader Johan
Vande Lanotte, quit his efforts to restart negotiations last
week after 99 days.
(Writing by Philip Blenkinsop, editing by Paul Taylor)