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The increase in the national debt is due to a weaker economic outlook than previously expected, Finance Minister Riikka Purra (Fin) said on Thursday while presenting the 2025 budget proposal.
Finland’s budget deficit will rise to around 12.2 billion euros from 10.7 billion euros expected in the spring, the finance minister said. Ricapra (Finn) made the announcement at a press conference Thursday afternoon.
This week, Pula submitted a budget proposal for 2025 drafted by his ministry, with a total budget of 88.1 billion euros.
“There is no reason to celebrate the current economic outlook just yet, but there are some bright spots,” Pula said.
She attributed the increase in debt to a weaker economic situation than previously expected.
The Treasury estimated in the report that the deficit would have soared to 16 billion euros without the austerity measures announced by the government earlier this year. The deficit is expected to be 600 million euros lower next year than this year.
The Finnish government announced a series of Austerity measures and tax increases Earlier this year, it tried to fill some 9 billion euros in government spending During the term of office.
Prime Minister Petri Orpo (NCP) told Yle earlier this week that he expects the Finnish economy to grow because ‘The worst is over’ In terms of austerity measures.
The four-party coalition government is expected to discuss the proposal in the first week of September.
Savings of €100 million
The Treasury’s proposal includes compensatory savings totaling just over 100 million euros, which have been agreed in the past but have not yet been allocated by the ministries.
The biggest savings will be 58 million euros, which means that the amount of compensation the state pays to municipalities to promote integration will be reduced. State funding for churches and religious activities will be reduced by 20 million euros.
The government will also save money on celiac disease compensation, adjustments for municipal groups receiving housing assistance, and the hepatitis C elimination program.
Increased spending
The budget proposal adds 13 million euros to new spending.
Pula noted that there was no wiggle room when the budget was drawn up and that the increases were considered absolutely necessary because they related to security and technical monitoring.
She further stressed that the spring estimates were not related to new spending increases.
The situation in welfare areas is worrying
In a press conference Thursday afternoon, Purra explained that in addition to the long-term weak economic conditions, Increases in social and health care (also known as “sote”) costs It also exacerbated the deficit.
“Despite the savings, some expenditures are increasing. The post-audit of next year’s budget shows a deficit of €1.5 billion, reflecting a deficit that was not initially anticipated last year. This is a sizeable figure,” Purra said.
The post-audit means the government will adjust the welfare districts’ funding upwards to make up for the deficits. All welfare districts have been running significant deficits since their inception.
Social welfare spending accounts for about 30 percent of the budget, Pla said, stressing that it was crucial to implement previously proposed savings measures for the welfare districts.
Debt ratio growth will stop in 2027
Pula said the growth in the debt ratio would stop by 2027 as long as the government’s decisions and additional measures outlined in the government program and budget negotiations were implemented on time.
But if stringent measures are not followed up, the debt ratio will soon start to rise again.
The figures in the budget proposal are based on the ministry’s June forecasts and will be revised in the fall, when the ministry will update its projections.
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