Finance Minister Riikka Purra’s budget proposal for 2024, alongside the framework for 2024–2027, aims to implement decisions that enhance Finland’s public finances. The proposed budget amounts to 87.2 billion euros, with a deficit of 10.1 billion euros. This budget is 3.7 billion euros higher than the 2023 budget, including the initial supplementary budget. The complete budget proposal will be accessible at budgeti.vm.fi on August 28.
The primary objective is to reverse the trend of rising debt. The government’s economic policy, led by Prime Minister Petteri Orpo, strives to ensure a prosperous future for upcoming generations. The fiscal policy focuses on bolstering public finances and curbing Finland’s increasing debt. The government has pledged to enhance public finances by 6 billion euros by 2027. Direct measures to strengthen finances will amount to over 4 billion euros by 2027, with additional measures aimed at boosting employment, adding nearly 2 billion euros by 2027.
The budget proposal incorporates adjustments outlined in the government program, with the intention of altering the course of public finance development. The framework system for the national economy plays a pivotal role in steering fiscal policy. The government is dedicated to adhering to the framework process for government spending, allowing for flexibility within the bounds of the election period.
The budget and framework proposals consider the savings and spending increments detailed in Annex B of the government program. These adjustments account for impacts on the state budget. The proposal maintains the economy’s overall trajectory outlined in the government’s program.
For 2024, the budget proposal adheres to expenditure guidelines laid out in Annex B of the government program, resulting in savings of nearly a billion euros in the state’s budget. By the end of the framework period in 2027, the cumulative impact of government program spending decisions is projected to be around 2 billion euros (2024 price level) and 2.5 billion euros in nominal terms.
The proposed 2024 budget carries a deficit of approximately 10 billion euros, an increase of 3.7 billion euros from the 2023 budget. However, this is less than the spring’s technical public finance plan, indicating a shift towards a more balanced state economy.
Noteworthy is the growth-focused investment plan, including increased R&D funding for 2024. The government plans to align state R&D funding according to the Act on State Research and Development Funding. The temporary 4 billion euro investment program, supported by proceeds from state asset sales, contributes to economic growth without increasing the state’s borrowing needs.
Tax policy adjustments outlined in the government program will be implemented in 2024 and beyond. The policy aims to boost economic conditions by supporting work, entrepreneurship, and domestic ownership. The government program does not propose a general increase in the tax rate.
Despite challenges and risks, Finland’s economic situation is promising. The year 2023 has seen better-than-anticipated economic performance. Although geopolitical tensions and other uncertainties exist, economic prospects are improving, with accelerating production growth and rising household purchasing power.
The budget proposal and public finance plan’s preparation will continue through September, involving negotiations between the Ministry of Finance, ministries, and government councils.