Belgian political parties negotiating a coalition agreement have reached a deal on the 2012 budget, seen as the last major obstacle to forming a government and Belgium's King Albert called for rapid steps to form a new cabinet.

The King is pleased that agreement has been reached. Accordingly, the King instructed the formateur to form a government as quickly as possible, the statement said, referring to the Belgian term for a person responsible for negotiating the coalition.

Belgium has set a modern-day record for being without a formal government -- it has been 19 months since elections were held last June.

The country's squabbling politicians need to find 11.3 billion euros (9.7 billion pounds) of savings so that Belgium can cut its deficit to below 2.8 percent of gross domestic product (GDP) next year, in line with EU rules.

On Friday, Standard&Poor's downgraded Belgium's sovereign credit rating to AA from AA+ because of the protracted lack of government which impeded the country's funding prospects.

(Reporting By Jan Strupczewski and Luke Baker)