Finland has canceled planned bond auctions for the remainder of the year and is on course to cut debt in 2018 for the first time in a decade, the finance ministry said on Sunday, according to Reuters.
Government debt was previously expected to increase by 1.3 billion euros this year but according to an update by the state treasury it will come down by 0.9 billion euros to 104.9 billion euros ($119 billion).
“Finland will be able to reduce debt for the first time in 10 years... This temporary turn is a significant thing psychologically,” Finance Minister Petteri Orpo said on his Twitter account.
“But the pace of reform in the economy must not slow down,” he added.
The debt reduction is due to several things, including growth in output and employment, payments to the state from Finnish Export Credit Agency and sales of shares in state-owned companies, a ministry source said.
Next year, however, the debt is expected to grow again by 1.6 billion euros.
In the decade following the global financial crisis, Finland’s economy struggled due to a string of external and internal problems, including a decline of Nokia’s former mobile phone business and recession in neighboring Russia.
While the economy has rebounded and is expected to grow by around 3 percent this year, the country’s employment rate is lagging Nordic peers at 72 percent and GDP growth is seen slowing down next year.
The general government debt per GDP has recently fallen below 60 percent as required by the European Union, but the ratio is seen growing again in the future amid an ageing population.
Orpo said the next government, to be formed after elections in April, must step up reforms to boost employment.
