IMF urges Finland to take more austerity measures

The International Monetary Fund (IMF) published its statement on the Finnish economy on Tuesday where it urged the Finnish government to take more austerity measures, said the Ministry of Finance in a press release.

According to the IMF, the Government is ambitiously seeking to stabilise general government finances, but the current measures are not enough to stop the growth of the debt ratio.

The IMF recommends new measures in addition to the spending cuts outlined in the Government Programme. For example, it recommended improving the efficiency of the wellbeing services counties.

The IMF also recommends that Finland take action to increase central government revenues through tax reforms.

According to the IMF statement, the Finnish economy recovered swiftly from the pandemic. However, the outlook has worsened due to high inflation and rising interest rates. Russia’s invasion of Ukraine also casts a shadow over the economic outlook.

The IMF anticipated modest growth in the Finnish economy this year. However, there are risks in the outlook that could tip Finland’s economy into a longer and wider recession.

The IMF's statement also examined the labour market, climate policy, productivity and the financial market.

Minister of Finance Riikka Purra welcomed the report by external experts.

“The IMF’s recommendations support my view of public finances. We need to do more to reach the goals of the Government Programme. New measures need to be broad and ambitious,” Purra said.

The IMF issues statements about all its member countries as part of its country monitoring activities.

The statement is based on assessments by IMF experts and on discussions they have held with Finnish authorities, labour market organisations, financial institutions, research institutes and other organisations.