International Monetary Fund publishes assessment of Finland's economy

Ministry of Finance 19.11.2019 10.26
News item

The International Monetary Fund's statement assesses Finland's fiscal policy and financial markets, among other things. It warns about risks to Finland's general government finances.

The International Monetary Fund (IMF) notes that the objectives set out in Finland's Government Programme are ambitious and deal with issues important for the economy. It also considers the loosening of fiscal policy in 2020 to be good for growth. However, the IMF warns the Government about the risks to general government finances in the medium term. It points to the challenge of getting the Government Programme implemented.

The IMF says in its statement that the growing demands of healthcare and social welfare services emphasise the importance of achieving a fiscal balance. It also states that fiscal buffers are necessary to ensure that the social welfare model can be preserved. If the global economy weakens beyond expectations, this, says the IMF, will increase the risks to Finland's general government finances.

In the IMF’s view, effective employment measures are available, but these should not be allowed to increase general government costs in order to ensure a fiscal balance.

Minister of Finance Mika Lintilä points out that the IMF has highlighted precisely the difficult issues that the Government is very familiar with.

“The Government Programme is demanding. It is clear that the cornerstones are a fiscal balance, a restructuring of health and social services and raising of the employment rate. These will not be achieved automatically, but require determined action,” says Minister Lintilä. 

The IMF is also concerned about the continuation of household indebtedness. It welcomes the measures proposed by the working group of the Ministry of Finance and stresses the need to curb borrowing by housing companies.

The IMF's Executive Board will discuss the country report on Finland in early 2020, along with a separate report on the equality impact and effectiveness of Finland's taxation system and social security system.

The IMF issues corresponding statements about all its member countries as part of its country monitoring. The IMF's visits to member countries are called Article IV Consultations, as they are required by Article IV of the IMF's Articles of Agreement. The statement is based on IMF experts’ own assessments and on discussions they have had with Finnish authorities, labour market organisations, financial institutions, research institutes and others.

Bank of Finland press release

Background information on IMF assessment

Inquiries:

Sari Sontag, Senior Ministerial Adviser, tel. +358 2955 30181, sari.sontag(at)vm.fi

Markus Lahtinen, Special Adviser to the Minister of Finance (Economic Affairs), tel. +358 295 530 417, markus.lahtinen(at)vm.fi

Economic Policy Financial markets