Dutch-language daily De Morgen said the Commission had rejected Belgium's deficit-reduction projections as too optimistic, meaning it could face financial sanctions for failing to stay within an official EU limit of 3 percent of GDP.

Vanackere said it was normal for the Commission to ask questions and this did not mean a rejection of the budget.

"We will do everything to make clear to the European Commission that Belgium is resolved to have a budget deficit of 2.8 percent," he told reporters ahead of a cabinet meeting.

Belgium has come under increasing market pressure over its high debt, which is approaching 100 percent of annual output, and in the past two months it has been downgraded by credit rating agencies Standard & Poor's and Moody's.

Political parties agreed a budget for 2012 in December that would show a saving of 11.3 billion euros ($15.21 billion) compared with the previous year.

However, the budget is based on an assumption of 0.8 percent economic growth and only a few weeks after it was presented, the central bank cut its growth forecast to 0.5 percent.

A European Commission spokesman said on Friday that the EU executive was continuing talks with the five countries and no final decision had been made.

After Vanackere's comments, the spread between benchmark 10-year German bunds and Belgian bonds fell by about 1 percent but remained at a lofty 274 basis points.

BUDGET REVIEW

In November, EU Economic Affairs Commissioner Olli Rehn said that the European Union had sent early warning letters to five member states, including Belgium, that risked violating fiscal rules in 2012.

Vanackere said on Friday that Belgium would conduct a budget review in February to see whether the country was on track.

"Everybody knows that around February we will have to have a serious budget review," he said.

Vanackere said that he was not concerned about a possible European Commission fine.

"If you're speeding on the highway you get a fine, but the object is not to do that. Belgium is also not planning to fall short of its obligations. That means the threat of a fine has disappeared," Vanackere said.

The central bank said last month that Belgium's budget deficit for 2011 was 4.2 percent of GDP.

(Additional reporting By Ben Deighton; Editing by David Brunnstrom and Susan Fenton)

By Robert-Jan Bartunek