The Bank of Finland has cast doubts on the ability of the Government of Prime Minister Juha Sipilä (Centre) to create savings of one billion euros in the municipal sector.
“The objective set by the Government to reduce the obligations and responsibilities of municipalities and, thereby, to create savings of one billion euros seems difficult to achieve,” the central bank states in a report published on Thursday.
The Bank of Finland reminds that the cost-cutting measures laid out in an action plan unveiled in February will only create savings of 400 million euros.
“The actual reductions in [municipal] responsibilities (14 measures) predominantly target elderly and disability services and create computational savings of a total of 120 million euros. The transfer of rescue services to the responsibility of provinces can create additional synergy savings of over 40 million euros. Another relatively large component of the savings plan is relaxing eligibility conditions especially in the field of health and social care, which is expected to facilitate savings of 90 million euros,” the report states.
“In other respects, the plan is based on increasing the operational latitude of municipalities. Meeting the overall savings target is contingent on the decisions of municipalities. The achieved savings are therefore likely to fall short of the target.”
The Bank of Finland also points out that despite the moderate growth in gross domestic product recorded last year, no significant economic turnaround is yet on the horizon.
“Private consumption and construction activities have picked up slightly, but no notable turn for the better has taken place in exports,” it says.
Aleksi Teivainen – HT
Photo: Vesa Moilanen – Lehtikuva
Source: Uusi Suomi