Sustainability of Finland’s public finances

Abstract

Finland’s general government debt grew rapidly after the financial crisis, almost doubling its volume relative to GDP. Even though the debt-to-GDP ratio has begun to decline, the rise in public expenditure stemming from population ageing over the next decades threatens to reverse this development. The Bank of Finland’s autumn 2018 estimate of the sustainability gap in Finland’s public finances is about 3% relative to GDP. Although the fiscal position is more comfortable now than at the time of the previous estimate, the long-term outlook for the public finances remains weaker.