31 Dec 2008

Belgian parties to form new govt

6:05 am on 31 December 2008

Political parties in Belgium have finalised a deal to form a new government to be led by Flemish Christian Democrat Herman Van Rompuy.

He will replace Yves Leterme, who resigned on 19 December after the Supreme Court found there were clear indications of political meddling in a bailout of the Fortis bank.

The five parties that made up Mr Leterme's government renewed their coalition after a three-hour meeting on Tuesday.

Mr Van Rompuy, 61, has been received by King Albert. He is Belgium's third prime minister since general elections in June, 2007.

He is expected to carry on with his predecessor's plan to battle a looming recession caused by the global financial crisis. Mr Van Rompuy was budget minister between 1993-1999 and sharply reduced public debt in his first year in office.

The previous government had planned a 2 billion euro ($US2.87 billion) package including tax cuts, lower energy costs and accelerated infrastructure projects.