(Bloomberg) -- Finland’s finance ministry said it’s more vital to implement the government’s austerity measures after Fitch Ratings cut the Nordic country’s credit outlook citing “insufficient” efforts to narrow its budget deficit.
The message “must be taken seriously,” Finance Minister Riikka Purra said in a statement on Saturday. Fitch’s message “underlines the importance of the implementation of the government’s austerity measures,” which must be completed, she added.
Fitch late on Friday revised the outlook on Finland’s AA+ long-term rating to negative from stable, saying the pro-business government’s fiscal consolidation efforts “will only slow the increase in public debt.” The ministry had earlier last week published a plan for only a marginal narrowing in the budget deficit next year while still pledging to balance the public finances by 2027.
“There is no visibility of further measures that could succeed in stabilizing and eventually reducing government debt,” Fitch said. It expects the fiscal deficit to narrow only modestly to 3.2% of GDP in 2025 after widening to 3.7% in 2024.
Jan von Gerich, chief strategist at Nordea Bank Abp, said the decision by Fitch “illustrates that the Finnish economy and public finances are facing large challenges, which will not be solved during one parliamentary term.” The outlook for Finnish bonds would be hit “if there is further slippage or loss of political will to take compensating measures,” he said.
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