Mikko Spolander, the director general at the economics department of the Ministry of Finance, says Finland should both take action to raise the employment rate and keep its purse strings tight.
“My summary of the current state of the economy and economic policy: 1) the employment rate should be raised because it’d be good for the public and the society at large, but at the same time 2) the public purse strings should be kept tight because the economy is booming,” he tweeted on Sunday.
Spolander told Helsingin Sanomat that carrying out structural reforms during an upswing is preferable because strong demand can compensate for the possible short-term adverse effects of the reforms.
“The purchasing power of households grows even without stimulus measures, because employment and earnings increase during upswings,” he explained to the newspaper.
The Ministry of Finance will convene to draft its budget proposal for next year on Tuesday and Wednesday. The proposal will be submitted to other ministries for review and published online on Thursday.
The Finnish government, meanwhile, will convene for its budget session on 28–29 August.
Also Pasi Kuoppamäki, an economist at Danske Bank, has estimated that it would be ill-advised to transition toward a looser fiscal policy in the midst of an upswing.
“You shouldn’t loosen the fiscal policy during an upswing, but as far as I’m concerned you could invest more in maintaining the high quality of education and also in fostering the skills of the working-age population,” he commented on Twitter.
“You could try to tackle parts of the maintenance backlog during the next downswing,” added Kuoppamäki.
Fitch on Friday revealed that it has re-affirmed its AA+ credit rating and upgraded its outlook for Finland. Petteri Orpo (NCP), the Minister of Finance, stated that while the improved outlook is encouraging, a lot of work remains to be done if the country is to earn a promotion from the second highest to the highest, triple-A club.
Aleksi Teivainen – HT
Photo: Martti Kainulainen – Lehtikuva
Source: Uusi Suomi