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Home BUSINESSWeak economy may lead to violation of EU rules: audit
Fri, 23 May, 2014 03:36:32 AM
FTimes-Xinhua Report, May 23

Finland's stagnant economic growth may result in breach of economic rules set by the European Union (EU), warned the National Audit Office of Finland (VTV) in a report published Thursday.

     Although Finland complied with the European Stability and Growth Pact last year, the weak economic growth generates a big risk, which may lead to breach of the rules stipulated in the Pact in the near future, said VTV.

     The Pact stipulates that member states' budget deficits should not exceed 3 percent of GDP, and the public debt should be kept under 60 percent of GDP.

     However, the Finnish Ministry of Finance estimated in its Economic Outlook made in April that the government debt will approach to the EU threshold at 59.8 percent in 2014, and will surpass it in 2015 at 61 percent.

     VTV pointed out that the public expenditures made by both the previous and current cabinets were really huge, adding that the cabinets failed to pay enough attention to the sliding GDP of the country.

     In addition, the sluggish economic performance caused by unsolved structural problems is also a threat, which might bring Finland to the third consecutive year of recession.

     VTT suggested that the government's structural program must be implemented effectively in order to stabilize the public finances.

     The Finnish government launched a cost-saving package in March to cut a total of 2.3 billion euros (about 3.17 billion U.S. dollars) by 2018, attempting to put the public finances back on track.

     The Stability and Growth Pact is an agreement signed by 28 member states of the EU, aiming to facilitate and maintain the stability of the Economic and Monetary Union. Violation of the common rules could bring about a warning or even sanctions by the European Commission.  

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