Finland Flag National Debt

Finland’s Debt Strategy Post-2008 Crash – How They Balanced The Books


Source: Finland Government Data

Last Updated: June 15, 2024

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Continue reading for more in-depth information about how Finland’s national debt is calculated and managed, what the country’s credit rating is, and how its government raises loans.

The National Debt of Finland

Finland’s “national debt” is measured as its “general government debt”.

The gross national debt of Finland, when expressed as a percentage of the country’s national income (GDP) worked out at 67.9% in 2020, according to IMF projections.

There are variations on how the figure of general government debt should be calculated. Thus, a number of authoritative international organizations publish different debt figures for all countries, including Finland.

The IMF publishes both gross debt and net debt figures. Gross debt is the total of all debt. However, the IMF only counts those debts entered into by a government through contracts, such as by taking out a loan or by selling bonds.

Net debt is gross debt minus all the financial assets owned by the government. The IMF-calculated net debt-to-GDP ratio published for Finland at the end of 2020 was -46.2%.

There is a big difference between the net and gross debt. That indicates that the government of Finland holds a lot of valuable assets while also maintaining debt.

As a member of the EU, Finland’s financial statistics are also reported on by Eurostat. This body counts all the debts of all levels of government in Finland in its national debt figure.

The Eurostat national debt figure projection for Finland at the end of 2020 came to 69.8%.

The OECD also counts general government debt as the same as the national debt. However, this body includes the value of all loan guarantees given by a government. Its gross debt-to-GDP figure for Finland at the end of 2017 was 70.7%.

Is Finland’s National Debt Growing?

Finland did very well at getting its national debt down since the year 2000.

By 2008, Finland had got its debt-to-GDP ratio down to 32.7%. This was a very low ratio by the standards of most developed economies.

However, the amount of central government debt in Finland almost doubled in the ten years after the financial crisis. OECD figures show that Finland’s debt-to-GDP ratio peaked at 73.2% in 2017.

Finland national debt figures
Source: OECD (2019), Government at a Glance 2019, Finland Country Fact Sheet (accessed on 12/12/2020)

A slight recovery after 2017 was made undone by the coronavirus pandemic in 2020.

Although Finland has a sophisticated service sector, it also has a strong manufacturing base. The nation’s mixed economy has helped the country to get through difficult times in the past and may again do so after 2020.

What Is Finland’s Credit Rating?

The best credit rating that a country can have is “AAA.” Finland doesn’t enjoy that level of rating. However, it has A-grade evaluations from all three of the world’s major credit ratings agencies.

S&P Global RatingsAA+Stable
Moody's Investors ServiceAa1Stable
Fitch RatingsAA+Positive

Spending Track Record

The track record of government spending in the years before the financial crisis of 2008 shows that the government of Finland has implemented the classic pattern of good budget management.

The government produced heavy budget surpluses during boom years and ran deficits during difficult years in order to pump extra money into the economy.

The fact that the government has clearly implemented prudent policies over the years increases investor confidence and keeps the credit rating high.

Another encouraging factor when considering investing in Finnish national debt is the country’s track record in increasing its income. Finland has only experienced a fall in GDP in one year of this century: 2009.

Who Manages Finland’s National Debt?

The government of the Republic of Finland is answerable to the national parliament for the national debt.

The government’s ministry of finance sets the annual budget and decides how much debt the government will need to take on. The implementation of that debt policy is the remit of the Valtiokonttori, which is the state treasury.

How Does the Finnish Government Raise Loans?

There are two phases in the sale of government debt instruments:

  1. Primary market
  2. Secondary market

Not everyone is allowed to buy securities directly from the government. The state treasury only sells debt instruments to a group of approved banks, who are called the primary dealers.

When the government wants to raise debt, the state treasury notifies the primary dealers of a forthcoming auction. Those dealers have to submit tenders for portions of the issue. This is known as the primary market for government securities.

Auctions take place through an electronic platform and pricing is set by the Dutch method. Once enough bids have been received to sell off all the instruments in the sale, all dealers pay the same price, which is the lowest price bid during the auction.

Once all the securities have been bought by the primary dealers, the phase of disseminating them into the economy begins. These are the activities of the secondary market.

Individuals and businesses from anywhere in the world can buy or trade government securities on MTS Finland, Brokertec, and eSpeed.

What Debt Instruments Does the Finnish Government Issue?

The state treasury needs to source debt with two time frames:

  • Short-term debt
  • Long-term debt

Short-term Debt

Short-term financing is provided by treasury bills. These can be issued in Euros or in US Dollars.

The state treasury is able to issue treasury bills with maturities from one day to 365 days. These instruments do not pay interest, but they are sold at a discount and paid off at full face value.

Long-term Debt

Long-term debt is funded by benchmark bonds. These pay a fixed rate of interest and have maturities of one year or more.

Fun Facts About Finland’s National Debt

  • You could wrap $1 bills around the Earth 758 times with the debt amount.

  • If you lay $1 bills on top of each other they would make a pile 21,269 km, or 13,216 miles high.

  • That's equivalent to 0.06 trips to the Moon.

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