General government deficit 3.0 per cent and debt 77.2 per cent relative to gross domestic product in 2023

Financial position of general government weakened and debt grew

In 2023, general government deficit, or net borrowing according to national accounts, was EUR 8.2 billion. According to the revised data, the financial position of general government weakened by EUR 7.7 billion from the previous year.

Compared to 2022, central and local government deficits weakened significantly. Central government's revised deficit amounted to EUR 8.9 billion, which was about EUR 5.4 billion more than in the previous year. The local government sector's revised deficit was EUR 3.0 billion in 2023. The deficit of local government weakened by EUR 2.6 billion from the previous year.

Of the sub-sectors of local government, local government (excl. wellbeing services county administration) showed a deficit of EUR 1.3 billion and the deficit of wellbeing services county administration was EUR 1.7 billion. Social security funds are divided into employment pension schemes and other social security funds. The surplus of employment pension schemes was around EUR 2.6 billion and that of other social security funds about EUR 1.1 billion.

General government deficit for 2023 was updated EUR 0.75 billion weaker than in April. The revision of the deficit was particularly caused by the property income of employment pension schemes decreasing by around EUR 0.5 billion from preliminary data. In the central government sector, the tax estimate on profits in the electricity and fossil fuel fields was reduced. The tax is recorded on accrual basis for the year 2023.

In addition, the deficit and debt data for October include time series revisions made to the national accounts in September 2024. In terms of net lending, the most significant deficit improving correction to the data for 2023 was the change in the recording of multilateral development banks' capital increases, from cash-based to commitment-based, which had an impact of just under EUR 100 million. Statistics Finland implemented the updated Manual on Government Deficit and Debt (MGDD 2022) in connection with the time series revision round.

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Consolidated general government gross debt (EDP debt) amounted to EUR 210.9 billion at the end of 2023. The debt grew by EUR 13.9 billion in 2023. Central government debt grew by EUR 13.7 billion and local government debt grew by EUR 2.0 billion. Debt of social security funds decreased by EUR 1.2 billion.

The increase in consolidated items between general government by EUR 627 million contributed to the debt of the entire general government sector growing by said EUR 13.9 billion in 2023. The EDP debt describes general government’s debt to the other sectors of the economy and to the rest of the world, and its development is influenced by changes in both the unconsolidated gross debt and the internal general government debt.

A change in the recording of long-term loans effective from 2013 was made to central government debt in connection with the time series adjustments of national accounts. According to new guidance issued by Eurostat, capitalised interest on Greek EFSF loans is recorded in the general government debt of both Greece and the Member States having provided guarantees. The change increases Finland's debt ratio by under 0.1 percentage points in the latest years.

GDP used as the denominator of the deficit and debt ratios was revised for 2023 from EUR 277.6 billion in accordance with the spring data to EUR 273.3 billion in the autumn. In addition to calculations based on data updates for the summer round, the change is explained by the level revision of the national accounts time series made in September. The level revision was taken backwards until 2010. Further information about the time series revision of national accounts is available from the September release of annual national accounts: Volume of gross domestic product decreased by 1.2 per cent in 2023 | Statistics Finland (stat.fi)

EDP reporting tables, notification in October 2024 (in English only) (PDF)

EDP reporting tables also include data on RRF grants received by Finland from the EU's Recovery and Resilience Facility.

Eurostat will publish data on Members States on 22 October 2024.

Central government's EDP debt differs as a concept from the central government debt published by the State Treasury

General government surplus/deficit refers to net lending/borrowing according to the sector accounts of national accounts, which is the difference between total revenue and expenditure. For instance, in the case of local government, the concept differs from the surplus/deficit of the accounting period according to the profit and loss accounts of municipalities and joint municipal authorities included in the sector. The key difference concerns investments, which are recorded in national accounts as expenditure as such.

In general government accounts, the European Financial Stability Facility EFSF is, based on Eurostat's decision, handled so that EFSF's borrowing is recorded as part of the gross government debt of the countries that have provided guarantees. The loan received by the beneficiary country from the EFSF is recorded as if it had been received from the countries in the euro area that have provided guarantees and these countries in turn owe the corresponding amount to the EFSF. As a result, the EDP gross debt of the countries that provided guarantees grows but the net debt remains unchanged because the countries have a similar receivable from the beneficiary country.

The gross government debt to be recorded in each country’s general government debt on the loans granted by the EFSF is calculated by dividing the loan granted to the beneficiary country by the contribution key (based on the share in the ECB's capital of each country participating in the support operations).

At the end of 2023, Finland's general government debt includes EUR 3.3 billion of debt granted by the EFSF to beneficiary countries. Corresponding treatment does not apply to the European Stability Mechanism (ESM).

Central government's EDP debt differs as a concept from the central government debt published by the State Treasury. Central government's EDP debt includes loans granted to beneficiary counties by the European Financial Stability Facility EFSF, received cash collateral related to derivative contracts, the capital of the Nuclear Waste Management Fund, debts generated from investments in central government's PPP (public-private partnership) projects, and coins that are in circulation. ARA interest subsidy loans are also included in general government debt.

In National Accounts, central government is also a broader concept than the budget and financial economy. However, the State Pension Fund is classified as a social security fund. The valuation principle for both debt concepts is the nominal value, where the effect of interest-rate contracts and currency swaps is taken into account. When these differences are taken into consideration, we reach the central government non-consolidated gross debt in accordance with the EDP concept.

In 2023, the State Treasury's central government debt EUR 156.2 billion + conceptual differences of the debt EUR 4.9 billion + differences caused by the sector delimitation EUR 3.3 billion + differences due to the recording of ARA interest subsidy loans EUR 10.1 billion = central government gross debt EUR 174.5 billion.

The stock of ARA interest subsidy loans added to local government amounted to EUR 7.0 billion. Hence, the impact of the rearrangement of ARA interest subsidy loans on the general government consolidated EDP debt was EUR 17.1 billion.

A list of units belonging to general government and decisions on major sector classification cases (only in Finnish).

Finland will update the EDP inventory concerning the compilation of deficit and debt data in connection with the October 2024 release (updated methodological description).