The logo of OP Financial Group in Espoo in April 2020. Timo Ritakallio, the director general of what is the largest provider of financial services in Finland, has voiced his concern about the growing debt burden of the central government, warning that unless action is taken the country could be faced with a sovereign debt crisis. (Emmi Korhonen – Lehtikuva)


THE YIELD on Finland’s 10-year bond has increased sharply in recent days, hitting the three-per-cent mark for the first time in a decade on Tuesday. The yield stood at 3.05 per cent, representing a roughly 1.8-percentage point increase since the beginning of August.

Timo Ritakallio, the director general of OP Financial Group, expressed his concern about the surge on Twitter on Tuesday. OP is the largest provider of financial services in Finland.

“Everyone should finally recognise that we have to put a stop to the rising indebtedness of the Finnish state or else the next crisis we face will be a sovereign debt crisis,” he underscored.

The debt burden of the central government has increased rapidly in recent years, from roughly 106 billion euros at the end of 2019 to 135.7 billion euros at the end of August 2022, highlighted Helsingin Sanomat. More than 123.5 billion euros of the debt has been provided by institutional investors.

The Finnish government is facing an increase in its interest expenses.

Data from the State Treasury reveals that annual interest expenses on budgetary debt have crept up from 788 million euros in 2021 to 800 million euros in early October. In spite of the upward trend, the expenses remain low from a longer-term viewpoint: the government has not spent less on interest expenses since 1990, when the expenses amounted to 794 million euros. The expenses peaked at over 5.6 billion euros in 1998 and remained over two billion euros until 2008.

Minister of Finance Annika Saarikko (Centre) stated last month at the unveiling of the government’s budget proposal for next year that interest expenses are expected to increase by 200 million euros in 2023.

Aleksi Teivainen – HT