Published: 21 April 2021
General government deficit 5.4 per cent and debt 69.2 per cent relative to GDP in 2020
Corrected 26 April 2021: The last sentence containing an erroneous interpretation was deleted from the introduction.
According to the revised data reported by Statistics Finland to Eurostat, general government deficit was 5.4 per cent relative to gross domestic product in 2020. The deficit exceeded the reference values of the European Union’s Stability and Growth Pact, which is three per cent relative to gross domestic product. General government EDP debt, or consolidated gross debt, was 69.2 per cent relative to gross domestic product at the end of 2020. The ratio of debt to GDP exceeded the reference value of 60 per cent.
General government EDP deficit (-), relative to GDP
In 2020, general government deficit, or net borrowing according to national accounts, was EUR 12.9 billion. The financial position of general government weakened by good EUR 10 billion from the year before. Compared to 2019, the financial position of central government weakened most, by around EUR 10.8 billion, being EUR 13.4 billion in deficit in 2020. Central government's total revenue decreased by EUR 3.2 billion and total expenditure grew by EUR 7.6 billion. The growth in total expenditure was particularly caused by the increase in income transfers to other sectors. According to preliminary data, the local government sector’s deficit changed to a surplus of EUR 175 million in 2020.
Social security funds are divided into employment pension schemes and other social security funds. The surplus of social security funds decreased due to a fall in dividend income to around EUR 270 million in 2020, that is, it decreased by around EUR three billion from the previous year. The surplus of employment pension schemes decreased to around EUR 430 million and the financial position of other social security funds changed from being in surplus to being around EUR 160 million in deficit in 2020.
General government EDP debt relative to GDP
Consolidated general government gross debt (EDP debt) amounted to EUR 164.3 billion at the end of 2020. The debt grew by EUR 21.4 billion in 2020. Central government debt grew by EUR 17.6 billion and local government debt by EUR 1.7 billion. The debt of social security funds grew by EUR 2.2 billion. The increase in consolidated items between general government by EUR 96 million contributed to the debt of the entire general government sector growing by said EUR 21.4 billion in 2020. 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.
Eurostat will publish preliminary data on Member States on 22 April 2021.
About the content and concepts of the statistics
General government surplus/deficit refers to net lending/borrowing according to the sector accounts of national accounts, which is the difference between the 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 the 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 for each country 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 2020, Finland's general government debt includes EUR 3.4 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 countries 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. In National Accounts, central government is also a broader concept than the budget and financial economy ( http://www.stat.fi/meta/luokitukset/_linkki/soveltamisp.html ) (only in Finnish). 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 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 (Appendix table 2). In 2020, the State Treasury's central government debt EUR 124.8 billion + conceptual differences of the debt EUR 6.4 billion + differences caused by the sector delimitation EUR 4.6 billion = central government gross debt EUR 135.9 billion. 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.
A list of units belonging to general government and decisions on major sector classification cases (only in Finnish) can be found at https://www.stat.fi/meta/luokitukset/_linkki/soveltamisp.html
Finland updated the EDP inventory concerning the compilation of deficit and debt data in connection with the release. A new updated methodological description can be found at: https://stat.fi/til/jali/men_en.html
Source: General government deficit and debt. Statistics Finland
Inquiries: Lotta Sjöblom 029 551 3342, Antti Suutari 029 551 3257, financial.accounts@stat.fi
Head of Department in charge: Katri Kaaja
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- Revisions in these statistics (21.4.2021)
Updated 21.4.2021
Official Statistics of Finland (OSF):
General government deficit and debt [e-publication].
ISSN=1799-5914. 2020. Helsinki: Statistics Finland [referred: 28.12.2024].
Access method: http://www.stat.fi/til/jali/2020/jali_2020_2021-04-21_tie_001_en.html