MoF: Budget proposal geared for stimulus (3.8.2009)

The Government is set to borrow EUR 13 billion in 2010. Total expenditures under Minister of Finance Jyrki Katainen's budget proposal come to EUR 49.9 billion, with the budget deficit standing at EUR 12.9 billion.

Central government finances, which in 2008 still showed a surplus-to-GDP ratio of one per cent, will weaken considerably both this year and next. The deficit will be covered by increased borrowing: in 2010 the government debt to GDP ratio will edge up to around 44%.

General government finances are also set to deteriorate in the wake of rising unemployment and declining tax bases. 

Ministries budget proposals in preparation

The recommendations of a working group set up to prepare plans to bring forward investments and other measures are not yet included in the Ministry of Finance budget proposal. Ministries have been requested to draft budget proposals according to the recommendations for their respective administrative branches. Decisions on the inclusion of these proposals in the 2010 budget proposal will be made in the Government budget sessionat the end of August. The recommendations and proposed measures set out in the working group report would increase on-budget expenditure by EUR 330 million, EUR 80 million of which would be realized in 2010.

Economic recovery expected to start in 2010

Triggered by falling exports last autumn, the vicious cycle of economic recession continued to deepen in Finland during the winter. Economic activity has slowed even further over the summer, although the fall in GDP is no longer accelerating. The pace of decline in the global economy has also slowed, and the uncertainties in the financial market have continued to ease.

By and large the economic forecast published by the Ministry of Finance in June is still valid. The indications are that economic recovery will start later in Finland than in the other euro countries. However by the beginning of 2010 the economy should be back on a cautious growth track. 

Read the whole press release in the Ministry of Finance's home page >>