Belgium forms interim government

The coalition will include Christian-Democrats and Liberals from both sides of the language border, as well as the French-speaking Socialists.

This 'emergency' government is designed to tackle pressing issues, such as the mounting energy and food prices.

It is also hoped that a new government will reduce the international interest in the political crisis, which is believed to be detrimental to foreign investment.

In the meantime, talks about state reform can continue without affecting governmental decisions, giving parties time to reach an overall agreement on the issue by Easter.

Flemish parties are however being criticised for entering a government without being given guarantees by their French-speaking counterparts that they will support substantial state reform later on - fuelling fears that problems are only being postponed to a later stage.

Mr Verhofstadt is expected to renew his oath on Friday, making the new government the third in a row he will lead.

After Easter, Yves Leterme of the Flemish Christian-Democrats will take over Mr Verhofstadt's office and establish a 'normal' government.

On Sunday, the Belgian parliament is expected to give a vote of confidence to the new government.

Why did it take so long?

Long formation negotiations are fairly common in Belgium which is deeply divided along linguistic lines.

The richer Dutch speaking Flanders is located in the north. Wallonia, located in the south of the country, is poorer and French-speaking. Brussels, the capital and located in Flanders, is officially bilingual but mainly French-speaking.

But it has never taken so long to form a government. The previous record of 148 days – set in 1988 - was broken in early November.

In order to amend the constitution and reform the state, an overall two-thirds parliamentary majority and a majority in each language group is required.

Broadly, Flemish parties demand that the regions are granted more powers in areas such as health care, employment and fiscal matters.

But French-speaking parties fear that this will undermine the financial solidarity between the richer Flanders and the poorer Wallonia and will eventually lead to a break-up of the country.

Another obstacle was the animosity between Liberals and Socialists in both halves of the country, partially inspired by the Liberal fear that social-economic reform would be stalled, making the participation of the Socialists difficult to sell to their voters.

In addition, Mr Leterme - appointed twice by the King to form a government - has made himself deeply unpopular in the south of the country by making a series of gaffes.