European Commission warns Finland of its rising public debt

By Al Mayadeen English
Source: Agencies
25 May 2023 17:22
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The commission's vice president for economic matters says Helsinki must reduce its state debt to GDP ratio and meet EU standards quickly.

European Commission building in Brussels (AFP)

The European Commission sounded the alarm on Finland's rising state debt, urging the Nordic country to immediately address the issue, a recent report by the commission revealed.

Data showed that the debt-to-GDP ratio now sits at 73%.

Finnish Finance Minister Petteri Orpo, who is currently working on forming the new government, said the report confirmed that Finland's economic situation is much worse than their Nordic neighbors'.

But Orpo stressed that Finland "traditionally had a different attitude," toward debt than Southern European countries, arguing that a real comparison must be made only with Germany and Nordic states.

In 2022, 13 European member states failed to maintain a public debt below the allowed amount by the EU, while Finland, France, and Italy did not reduce debt to the agreed-upon limit in the European Union. But Helsenky remained the only member to witness a continued debt ratio increase.

The Vice President of the European Commission for Economy and Trade, Valdis Dombrovskis, stated that the EU is monitoring 16 member states that saw more than three percent deficit or countries that have a debt over 60% of GDP.

He added that the situation in these countries does not warrant the unrestricted deficit measures, implying that Dombrovskis might instruct the countries to lower the state debt and deficit, and failure to do so might subject the member states to more fines.

Despite easing restrictions constituted by the Stability and Growth Pact SGP following the Covid pandemic and the war in Ukraine, it is expected that more conservative economic measures will be further implemented in 2024.

The Commission provided Finland with economic tools to fight the debt increase, including canceling energy subsidies, deducing dependence on fossil fuels, and working toward speeding up the process to adopt renewable energy, in addition to addressing the country's talent and labor shortage.