Spending

Minister of Finance: War in Ukraine Increases Spending | News

The war in Ukraine weighs half a billion euros on the budget.

Finance Minister Annika Saarikko (Cen) spoke on Saturday about the impact of the war in Ukraine on Finland’s finances. Image: Ylé

Minister of Finances Annika Saarikko (Cen) said on Saturday that the war in Ukraine had an impact on Finland’s public finances.

“The budgetary framework agreed last spring will be respected in all areas other than preparedness and overall security. For these, we are including a special clause in the framework,” Saarikko told Yle’s Ykkösaamu talk show on Saturday.

The impact of the war on the budget

The increase in expenditure triggered by the war amounts to hundreds of millions of euros.

Additional agricultural support, increased funding for the Defense Force and aid to the transport sector have all been included in the supplementary budget.

“The crisis makes it necessary to increase investments in defence, security supply, energy and refugees. We want municipalities to play an important role in solving the refugee problem,” Saarikko told Ykkösaamu .

Some 60,000 Ukrainians are expected to arrive in Finland.

“From now on it will mean an additional cost of at least half a billion a year. I hope we have the broad support of the people on this,” Saarikko added.

Additional budget spending in response to the war will force Finland into more debt, which has raised concerns about government borrowing.

Petteri Orpo, chairman of the National Coalition Party (NCP), has called for cuts to social programs. Saarikko, who leads the Center Party, said she disagreed with the idea.

“Suggestions that now is the time to cut incomes to the lowest earners are not helping the country,” she said.

Saarikko, who chairs a special ministerial task force set up to deal with the impacts of the war in Ukraine, also spoke about other ongoing economic concerns.

Last week the President Sauli Niinisto told Ykkösaamu that NATO membership was important for Finland’s international image as it could boost confidence in the country’s security. That said, the show asked Saarikko if she thought investors were worried about Finland’s proximity to Russia.

“There’s no sign of that at the moment, and I don’t want to stir anything that isn’t there.”

With the nurses’ strike underway, Saarikko has also responded to calls for 30% wage increases over five years.

“According to the Ministry of Finance’s preliminary calculations, if all salaries of employees in the entire municipal sector were to increase by this much, the effects on public finances in five years would be just under four billion a year.”

Saarikko also pointed out that before Russia’s war in Ukraine, Finland’s economic forecast for this year was “excellent”, saying that “we were rapidly emerging from the economic recession caused by Covid”.