Juha Ristamäki
The ship of state is now swimming in such a heavy debt load that the government’s goal of turning the debt ratio down is tough, writes Juha Ristamäki.
Finance Minister Purra and Prime Minister Orpo in last April’s frame riot. Fanni Uusitalo, Government Office
Petteri Orpo’s (kok) government will meet on Tuesday for its second budget meeting. No huge drama is expected from the budget tussle. It is simply because there is no money, only scarcity to share.
The debt rally will continue even in next year’s budget. Finance Minister Riikka Purra’s (ps) budget proposal is 12.2 billion euros in deficit. It is good to hope that the deficit would remain after the budget tussle – as ministers tend to try to grab additional money for their administration or slip from the agreed savings.
For example, a year ago, the Ministry of Finance’s (MoF) budget proposal for 2024 had a deficit of 10.3 billion euros. During the budget rush, the deficit grew to 11.5 billion euros. In the end, the current year’s deficit reached 12.7 billion euros.
The basis of the budget crisis is Purra’s budget proposal and the Ministry of Finance’s latest financial forecast, which will only become public after the budget crisis, because the decisions of the budget crisis affect the forecast, and it will probably need to be updated for this reason. According to preliminary information, VM’s forecast has not changed much since the summer.
The government’s goal is to stabilize and reverse the debt ratio of the public finances by 2027. The state ship is now swimming in such a heavy debt burden that the goal is tough.
In order for the government to reach the finish line, it would need reasonably strong economic growth to support it. Indebtedness is increasing, but if the gross domestic product (GDP) grew moderately, the ratio of debt to GDP would turn downward.
Unfortunately for the government, the signs of growth do not actually raise Riemunkiljahduks.
This year we are experiencing zero growth, next year’s growth is estimated by VM to be 1.6 percent, for 2026 the forecast is 1.5 percent.
Orpo and Purra have tried to swear to believe in the citizens so that they would not pledge their spending, but it is not enough. We would need traction help from our central message countries. According to VM, “growth is expected to accelerate especially in Finland’s important export markets in Europe in 2025”.
The government’s eggs are all in this basket. If there is no economic growth, and employment does not start to increase, the functionality of the government’s labor market measures will remain untested, and criticism of them will grow even more.
The biggest single crown of sorrow is the drastic increase in social and health spending. The welfare regions’ deficits during the election period are at least 4-5 billion euros.
The leaders of the welfare regions sent a joint statement on Monday, which assured that many things are already better in the regions: for example, access to primary health care has been accelerated, queues for specialized medical care, housing services and from the emergency room to the bed ward have shortened across the country.
That’s fine, but the financial situation of the welfare regions is still acute. In this budget rush, the mess is not completely covered yet, but next year’s mid-term and budget rush is.
Municipal and regional elections will be held on April 13, 2025, before then the parties will hardly dare to put their social security cards on the table quite openly.
Politicians have been bickering to the point of boredom about whose fault the huge deficits in the welfare regions are. Now we should slowly get to how services would be reorganized in other ways than just cutting them.
The aging of the population and the increase in the need for services do not care what color government sits in the country.
We know ways to improve the productivity of the social security system, but now we should continue to develop social security even more vigorously: to improve the transparency of costs, to implement technological solutions, to expand in-house doctor trials and so on. The number of welfare areas and social and healthcare cooperation areas and the areas’ right to tax must be examined without prejudice.
There must also be readiness to dismantle poorly functioning solutions, for example, the expensive withdrawal of Kela compensations has not yet worked as desired.
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