Finland Likely to Be Subject to EU Excessive Debt Procedure
Addressing lawmakers in parliament, Purra referenced the European Commission’s latest economic forecast, which indicates Finland’s state debt could surpass the 90% of GDP threshold as early as 2026, according to media.
"Finland will be subject to the Excessive Debt Procedure from the beginning of the year," Purra said Tuesday, adding that this appears "very clear, based on the figures."
The commission projects that Finland’s public debt will climb to 92.3% of GDP by 2027. On Monday, the European Commission noted that Finland’s economy is stagnating and predicted the country could become the sixth most indebted EU member by 2027.
Purra highlighted that surpassing the 90% debt mark will trigger EU requirements for the next Finnish government to implement measures reducing the debt ratio by at least 1% annually.
The procedure also obliges Finland to report more frequently on its public finances and progress toward debt reduction than it currently does.
The finance minister attributed the problem to weak revenue growth, stressing the structural nature of Finland’s economic issues.
"Defense spending does not explain our current deficit, but rather the weak development of revenue in relation to other growing expenditures, like rapidly growing social welfare expenditures and (benefit) transfer payments," she said.
Failure to comply with the procedure could expose Finland to sanctions, though the threshold for such penalties is considered high, according to the report.
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