The agreement, announced at 01.00 am Saturday (8 October), signalled a major breakthrough in ongoing government talks, some 500 days after a general election held in June last year.
The agreement will give the country's two main regions, Flanders and Wallonia, more power to raise their own taxes, setting them further apart and weakening the federal level.
The deal to overhaul Belgium's institutions "puts an end to decade-long divergences between [regional] communities and a political crisis that lasted more than a year," the Green party said on its website.
Charles Michel, leader of the French-speaking liberal party MR, hailed the reform as "the most important since the Second World War."
Talks will now continue between the eight parties involved in coalition negotiations on the socio-economic aspects, including the 2012 budget and measures to curb the country's debt.
The state reform agreement comes on the heels of a September deal that sealed the break-up of the BHV electoral district surrounding the Belgian capital Brussels. The break-up was a key demand of political parties in the Dutch-speaking Flanders region, where nationalists made huge strides at last year's election.
Details of the agreement will be announced on Tuesday, when it will be presented to the Belgian Parliament but some elements are already known:
- The Bruxelles-Hal-Vilvoorde electoral district will be split, with some municipalities now considered Dutch-speaking instead of bilingual.
- In exchange for the BHV split, Brussels will see its financing strengthened over time to the tune of €461 million.
- As of 2014, elections at regional and federal level will now be held every five years, up from four currently, in order to bring them in line with the European elections.
- Traffic rules will be partly delegated to the regions, with speed limits now enforceable on smaller roads at regional level.
