Belgian PM sets Christmas deadline for budget deal

BRUSSELS (Reuters) -Belgian Prime Minister Bart De Wever gave his coalition partners an ultimatum on Thursday to agree to a federal budget by Christmas or face the collapse of the government.

Budget negotiations in the five-party coalition have dragged on for months and hit a wall this week, as parties remained divided on how they should repair Belgium's government finances, prompting De Wever to report the deadlock to the king.

"That's why I have asked: 'Your majesty, give me 50 days'," De Wever told parliament, adding that there would be no extension of this "maximum period".

The budget deficit of the euro zone's sixth-largest economy is set to hit 4.5% of gross domestic product this year, with debt of 104.7% of GDP, according to the central bank - well above the maximum agreed under EU budget rules.

De Wever is looking for 10 billion euros ($11.66 billion) of spending cuts and tax hikes by 2030 to cut the deficit and debt.

But the French-speaking liberal MR party, in particular, has so far refused to agree to a proposed increase of value-added tax or to skip the next automatic hike of wages linked to inflation.

The Belgian government also grappled on Thursday morning with the security threat posed by drone sightings that forced the closure of its airports and a military base this week. It plans initially to improve the surveillance of its airspace.

($1 = 0.8575 euros)

(Reporting by Charlotte Van Campenhout, Bart Meijer and Philip Blenkinsop, Editing by Philip Blenkinsop and Alex Richardson)