General government deficit grew by EUR 1.7 billion in October to December 2023 from the previous year

Current transfers paid by central government to local government and income tax revenue of central government grew in 2023

Central government non-consolidated total revenue grew by EUR 3.8 billion (21.1%) and non-consolidated total expenditure increased by EUR 3.3 billion (17.2%) from the quarter twelve months back. The revenue item that grew most in monetary terms was income tax received by central government and the expenditure item that increased most was current transfers from central government to wellbeing services counties. The difference between revenue and expenditure, that is, central government net borrowing, was EUR 0.6 billion in the fourth quarter of 2023.

The healthcare and social services reform changed local government financing by increasing current transfers received by local government from central government and by correspondingly decreasing income tax received by local government starting from the first quarter of 2023.

A non-recurring compensation of EUR 0.5 billion paid to wellbeing services counties in January 2024, adjusting the funding for 2023, was recorded as revenue for wellbeing services counties and as expenditure for central government for the last quarter of 2023.

Growth in total expenditure and decrease in total revenue behind weakened local government financial position

Local government total expenditure increased by EUR 1.3 billion (7.8%) and total revenue decreased by EUR 0.6 billion (-3.8%) from the quarter twelve months back. Compensation of employees and intermediate consumption increased most of total expenditure in monetary terms, taxes received decreased most of total revenue. Local government deficit (net borrowing) was EUR 2.1 billion in the last quarter of the year.

From the beginning of 2023, the local government sector has been divided into new sub-sectors: local government excl. wellbeing services county administration (S13131) and wellbeing services county administration (S13132). The change causes a break in the time series of the figures of local government. The data of the new sub-sectors of local government will become revised as new source data improve and annual national accounts data for the statistical reference year 2023 are revised.

Social security benefits other than social transfers in kind paid by social security funds increased

Employment pension schemes’ total revenue grew by EUR 0.5 billion (5.7%) and total expenditure by EUR 0.5 billion (7.1%) from the quarter twelve months back. The revenue item that grew most in monetary terms was property income. The expenditure item that grew most in monetary terms was paid social benefits other than social transfers in kind, the rapid growth of which is due to substantial index increases. The surplus (net lending) of employment pension schemes was EUR 0.4 billion in the last quarter.

Other social security funds’ total revenue decreased by EUR 0.05 billion (0.9%) and total expenditure grew by EUR 0.25 billion (4.9%) from the quarter twelve months back. The revenue item that decreased most was current transfers from central government. The increase in expenditure is largely explained by the growth in social security benefits other than social transfers in kind. The deficit (net borrowing) of other social security funds was EUR 0.2 billion.