The Flemish separatist N-VA party which wants to divide Belgium was on course last night to win the most seats in parliamentary elections. Such a result could also complicate attempts to form a coalition that can bring the budget under control in a country plagued by rising national debt.

With 86% of the votes counted by late last night, the interior ministry predicted the New Flemish Alliance, which wants to gradually split the country between Dutch-speaking Flanders and French-speaking Wallonia, would win 28 of the 150 seats in the lower house of parliament, compared with just eight now. That would narrowly push the mainly French-speaking Socialists into second place. Heavy losses were expected for the Christian Democrats and the Liberals.

"The N-VA has won the election today," the party's leader, Bart De Wever, told jubilant supporters. "We stand before you with a party that has some 30% [of the Flemish vote]."

He urged francophones to "make [a country] that works". "If we don't, we slide backward," De Wever said.

N-VA supporters last night flew the yellow and black Flanders flag and sang the Flemish anthem during post-election celebrations.

Prime minister Yves Leterme's outgoing coalition is made up of Christian Democrats, Liberals and Socialists all split into Dutch- and French-speaking factions. His government collapsed in April over a long-standing row about voting rights for French speakers around Brussels. As a result, the election was brought forward by a year.

Socialist leader Elio Di Rupo is widely tipped to be the new prime minister. "Many Flemish people want the country's institutions reformed," he said. "We need to listen to that."

Even if the N-VA does win the most votes, it won't immediately be able to devolve powers to the regions.

Drawn-out coalition talks could make Belgium vulnerable on the financial markets, where analysts are closely watching a debt crisis among the 16 countries that use the euro. The country's debt-to-GDP ratio is Europe's third highest. It is set to rise beyond 100% this year or next, behind Greece and Italy. Leterme won the 2007 election – then took nine months to form his five-party government.

• This article was amended on 14 and 24 June 2010, to clarify that the anthem sung by celebrating N-VA supporters was the Flemish anthem rather than the Belgian anthem. The original also said the government collapsed in April over a long-standing row about voting rights for Dutch speakers around Brussels. This has now been corrected