By Geert De Clercq

BRUSSELS, Sept 5 (Reuter) Moonlighting, the drugs trade and prostitution
are set to boost Belgian gross domestic product (GDP) from 199798.

In compliance with a European Union directive, Belgium's National Accounts
Institute (NAS) will include estimates of proceeds from the large underground
economy in GDP data from 1997, a central bank official told Reuters on
Friday.

For the 1998 GDP data, the NAS will also include estimates of revenue from
illegal activities.

``That means casinos, drugs and prostitution,'' the official said. In theory,
even money paid by a gangster to a hitman should boost the benchmark of
economic growth.

How to measure that, is another question.

``We are looking for a method,'' said the official.

He added that private studies about the country's black economy had estimated
its size at between three to 25 percent of official GDP.

Friedrich Schneider, a professor at Linz university, Austria, estimated in a
recent study the black economies in many EU states exceeded 15 percent of
official GDP and even 20 percent in Belgium.

In Belgium, where marginal tax rates are as high as 55 percent, tax avoidance
is a national obsession. In sectors such as domestic help and home repairs,
there is more unregistered labour than official labour, while in sectors such
as restaurants and retail, where cash payments are predominant, a large part
of turnover is realised outside the official circuit.

The widening of the GDP measure to include all this could have a major impact
on Belgium's state deficit to GDP ratio, the indicator most closely monitored
by financial markets.

The central bank estimates 1997 nominal GDP at 8,570 billion Belgian francs
and the 1997 budget deficit at 240 billion francs, for a deficit/GDP ratio of
2.8 percent.

If the inclusion of underground activities were to boost 1997 GDP by 10
percent to 9,427 billion francs, the deficit/GDP ratio would drop to 2.5
percent. A 20 percent boost to GDP would reduce the ratio to 2.3 percent.

The central bank official said the GDP revision would not be used to flatter
the country's ratios ahead of the European Union's review early next year of
which member states are fit to join the single currency in 1999.

``The revision of 1997 GDP will not be released until September 1998, when
the data must be reported to (European statistics agency) Eurostat. By then
the single currency members will have been chosen,'' the official said.

Several EU states have integrated estimates of their underground economies
into official GDP data in recent years, including Italy, Greece, Portugal,
Luxembourg and Ireland. The revisions ranged from five to 20 percent of GDP.

The European Commission wants a better estimate of EU countries' real wealth
to insure EU budget contributions, which are calculated partly on the basis
of GDP, are fair.