Helsinki [Finland], September 20: The Finnish government completed its 2024 budget talks on Tuesday, raising the budget deficit amid multiple economic challenges.
Finance Minister RiikkaPurra said during a late evening press conference that the budget deficit is 11.5 billion euros (12.28 billion U.S. dollars), which is 1.4 billion euros more than the draft published in August. In 2027, the deficit is expected to remain at 10.6 billion euros, she added.
Purra mentioned that the demographic situation in Finland is a significant factor, along with the increased interest rates affecting the state's debt costs, which have tripled in a short period. Further cutbacks in state spending may be required later, to be decided during the halfway seminar of the four-year cabinet term.
Prime Minister Petteri Orpo said that he had previously been involved in preparing six state budgets, and the current situation is the most serious he has encountered.
"The situation in Finland is serious. That's why the government's program has included the means by which it is possible to reverse the direction of the public finances ... We have to make difficult savings," said Orpo.
The government said in a media release that, based on the latest forecasts, the state of the public economy is alarming. The government concludes that the cutbacks decided upon thus far, combined with measures to boost employment and growth, will help halt the increase in public debt.
The Finnish government said that additional funding for national defense is necessary. It also plans to increase spending on research and development, and to launch a development program for Eastern Finland, an area that has been adversely affected by the closure of the border with Russia and the decline in cross-border tourism.
EssiEerola, head of the domestic economic process in the monetary policy and research department at the Bank of Finland, addressed the government's claim that there is a structural imbalance in Finnish government revenue and spending, noting that Finland would require a long-term program to address the issue. (1 euro = 1.07 U.S. dollar)