Governments will take on 56 billion euros of debt in four years – 2024-03-01 02:05:14

In the years 2025—2027, the deficit is on average about 0.1 billion larger than in the autumn 2023 framework decision. Middle Soul

The Ministry of Finance (MoF) has announced its proposals for the framework of the state economy. In the Ministry of Finance’s framework proposal, the state budget deficit is estimated to be 12.9 billion euros in 2025, which is 1.5 billion euros more than what is budgeted for 2024.

In the Ministry of Finance’s framework decision last fall, the 2025 deficit of the state economy was estimated at 12.7 billion euros, which means that the estimate of the deficit has increased by 200 million euros since the fall. The deficit of the national economy for the current year is currently 11.44 billion euros.

– Compared to the autumn 2023 framework decision, the balance of the state finances has been weakened especially by the lowering of tax revenue estimates. Expenditures are increased, among other things, by the larger-than-estimated deficit of the welfare areas and its effect on the state funding of the welfare areas, the Ministry of Education’s press release states.

The state’s funding of welfare regions will be 26.5 billion euros in 2025. The level of funding for welfare regions will increase by 2.1 billion euros compared to the previous framework decision. According to VM, the change is caused especially by the ex post review of the funding and the 2025 index increase.

According to the Ministry of Finance, expenses will be reduced by the reduction of the state’s share of municipal basic services due to the refinement of the social security transfer calculation included in the 2024 supplementary budget, as well as the reduction of the need estimates for some appropriations.

According to the Ministry of Finance, the reforms and cost savings in accordance with the government program will reduce the expenses of 2025 by approximately 0.5 billion euros compared to 2024.

The interest rate swindler strikes

The rise in the general interest rate has stopped and inflation is expected to slow down. VM estimates that interest expenses will rise from next year’s 3.4 billion euros to 4.2 billion euros by the end of the framework period.

The increase in the general interest rate that has occurred in recent years is passed on to debt servicing expenses with a delay. In VM’s economic cycle forecast, it is estimated that long-term interest rates will remain almost unchanged during the framework period at slightly more than three percent, and short-term interest rates are expected to decrease to two percent at the end of the framework period.

In 2025, the expenditure of the budget economy is estimated to be approx. 89.5 billion euros. It is about 1.6 billion euros more than in the actual budget for 2024.

The debt swells

According to the Ministry of Finance, the deficit between 2025 and 2027 will be about 0.1 billion larger on average than in the autumn 2023 framework decision, i.e. the change is on average 100 million euros for the worse.

According to the Ministry of Finance, the national budget deficit will be 11.5 billion euros in 2026, 10.4 billion in 2027 and 10 billion euros in 2028.

VM estimates the amount of government debt to be 181 billion euros at the end of 2025, which is about 60% in relation to gross domestic product.

At the end of 2028, the state debt will be 212 billion euros, according to the Ministry of Finance’s estimate. The national debt at the end of 2023 was 156.2 billion euros. Based on these figures Petteri Orpon (kok) government and the government after it (in their first budget) would take on new debt of 55.8 billion euros.

Antti Rinne (sd) me Hello Marine (sd) the governments’ four-year debt balance was around 50 billion euros.

In the state budget proposal for 2024, the state debt is estimated to be 163 billion euros at the end of the current year.

The national debt in relation to gross domestic product will increase from 58 percent of the current year to 60 percent in 2025, 61 percent in 2026, 62 percent in 2027 and 63 percent in 2028, according to the Ministry of Finance.

VM: The entire public economy needs to be strengthened

The Ministry of Finance’s proposal is in accordance with the preparation situation on February 29, 2024.

– It does not contain new measures to strengthen the public finances, but forms the basis for the future preparation of the public finances plan. However, the weakened situation of the public finances as a whole requires the strengthening of the public finances and a critical assessment of new financing needs, the Ministry of Finance’s press release states.

According to the Ministry of Finance, the preparation of possible new measures to strengthen the public finances aims to be able to decide on them in the final public finance plan.

The government decides on the public finance plan, and Petteri Orpon The (kok) government will discuss it on the 15th–16th. April, in its frame rush, based on the proposal of the Ministry of the Interior.

Based on the approved public finance plan, the state budget for 2025 will be drawn up. Based on the plan, the parliament also holds a discussion on the prospects and development directions of the public finances.

The Ministry of Finance reminds that in the draft published today, it was not possible to take into account the Ministry of Finance’s economic forecast to be published in April 2024, on which the final public finance plan and the framework decision on the state finances will be based.

The case was corrected on 29.2. at 9:45 p.m.: It was mentioned in the story that Orpo’s board is taking on new debt of around 56 billion euros. However, the latest year of the framework figures, 2028, is already the budget year of the government following Orpo’s government. Therefore, it is correct to say that the Orpo (kok) government and the government following it (in their first budget) would take on a new debt of 55.8 billion euros.