The business-supported think tank Etla (Finnish Economic Research Institute) has sharply criticized the Prime Minister’s government Sanna Marin (SDP) is planned to exceed the public expenditure framework.
Due to the tight budget negotiations that took place earlier in the spring, the government announced that the expenditure framework will be exceeded by EUR 900 million next year and by EUR 2023,500 million in 2023. The dispute over the state’s spending plans for the next few years was led by a coalition of almost five parties.
In a report called "Fiscal policy is flying without an anchor", Etla said that exceeding the spending limits in 2022 and 2023 cannot be considered justified, as keeping spending within the framework would be entirely possible next year.
According to Etla, the current vaccination rate will reach the immunity of cattle in Finland as early as autumn 2021, and economic growth is expected to be strong.
The report was written by Etla’s CEO Aki Kangasharju, research director Tero Kuusi and the researcher Päivi Puonti.
“Such a policy destroys Finland’s future”
In Etla’s view, the government’s decision to exceed the expenditure framework poses a serious threat to the credibility of the entire framework process.
"It is particularly detrimental when the expenditure framework is raised during the year [economic] increase and increase in expenditure in parallel with the EU stimulus package," the report said.
Etla added that compliance with the state expenditure framework and, more broadly, fiscal policy objectives has failed during the term of this government. CEO Kangasharju wrote that the government has focused mainly on a number of different social policy goals.
"Fiscal policy appears to be an uncoordinated outcome of these actions, implying a continued recovery in the upturn and a failure to achieve a sustainable fiscal perspective. Such a policy destroys Finland’s future," Kangasharju wrote in a press release.
Etla suggested that Finland’s debt framework should be defined by setting a target and a credible expenditure framework for the entire public finances.
Source: The Nordic Page