The National Audit Office of Finland (NAOF) said on Thursday that the government is in danger of violating the terms of the EU's Stability and Growth Pact (SGP), designed to help coordinate national fiscal policy. Finland has previously nearly exceeded the terms of the pact in 2014 and again in 2017.
The audit office estimated that public spending would also grow faster than EU regulations permit, and that Finland would need to boost employment to ensure compliance and balance government finances.
"At present, it seems that a significant deviation from the Pact may arise in the structural balance of general government bodies," the NAOF press release read. "On the other hand, in light of the information presently available, the limit would be exceeded by only a small degree."
The NAOF said that the government programme's target of 60,000 newly employed persons by 2023 is doable.
"The government’s one-off future investment programme will be launched in 2020, and it will have an impact on the compliance. [Also] the additional permanent expenditure decided by the government will be realised before the tax increases … bring additional income," said economist Leena Savolainen in the release.
"Although the estimates involve uncertainty, we encourage the government to pay attention to the risk of a substantial deviation from the preventive arm of the Stability and Growth Pact. In the spring of 2021, we will give our final estimate of Finland’s compliance with the Pact in 2020."
The NAOF will publish a more extensive report on fiscal policy in December.