## 1. Exposure to Trade Disruptions and U.S. Tariffs

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### Export structure and measured exposure
- Goods and services exports account for over 40 percent of GDP.
- A significant share of exports is concentrated in capital goods, intermediate products, and specialized services.
- The U.S. accounts for about 10 percent of Finland’s goods exports; these exports account for 6 percent of GDP when indirect links are included.
- Finland’s trade-weighted tariff rate on U.S. exports stands at 15 percent, lower than that of most EU countries.
- Measured exposure via Domestic Value-Added (DVA):
  - Direct exposure of Finland’s DVA exports to a potential increase in U.S. tariffs: 0.7 percent of GDP.
  - Indirect exposure of Finland’s DVA exports to a potential increase in U.S. tariffs: 0.7 percent of GDP.
  - Total reported exposure (Direct + Indirect) shown in source figures and discussed in text.

### U.S.–EU tariff agreement and trade elasticities
- In July 2025 the U.S. and EU reached an agreement capping reciprocal tariffs at 15 percent and exempting strategic sectors, including pharmaceuticals, semiconductors, and selected chemicals.
- Considered in the context of this agreement, Finland’s trade-weighted tariff rate is 15 percent.
- Trade elasticity estimates (weighted average of U.S. imports from European countries) place Finland among mid-range European countries in the displayed ordering (Finland labeled in charts; exact elasticity values shown in source figures).

### Realized trade flows through 2025Q3 and short-term assessment
- Nominal exports were broadly flat in 2025Q2/Q3.
- Real exports grew by about 1.9 percent YoY up to 2025Q3, reflecting lower export prices.
- Export volumes grew 3.2 percent YoY up to 2025Q3.
- Import volumes grew by about 0.7 percent YoY up to 2025Q3 (noting weak domestic demand).
- High-frequency indicators show little evidence of ‘front loading’ in 2025Q1.
- Export values declined as falling prices led to a modest deterioration in the terms-of-trade.
- Near-term assessment: trade patterns have not been materially altered so far through 2025Q3, but significant downside risks remain.
- External position for 2025 is assessed to be broadly in line with medium-term fundamentals and desirable policies.

### Risks and channels of impact
- Persisting uncertainty about future U.S. trade policy continues to dampen business sentiment.
- Indirect spillovers are material given strong integration of Finnish exporters within European value chains, particularly through Germany and Sweden.
- The potential for higher trade elasticities over the long term increases downside risk to exports and investment.
- Escalating trade tensions could:
  - Weigh on trade and investment.
  - If supply chain bottlenecks re-emerge, reignite inflationary pressures.
  - Increase NPLs, especially in manufacturing.
  - Weigh on demand and investor confidence in a protracted period of global fragmentation.
- Cyber threats and global financial-market volatility are noted as additional vulnerabilities that can amplify trade-disruption effects.

---

### Box 2 — Adverse scenario: Macroeconomic forecasts and selected impacts
- Scenario assumptions (based on October 2025 WEO risk assessment, Box 1.2, Scenario A):
  - Permanently higher U.S. tariffs without broad retaliation; tighter global financial conditions; reassessment of public-debt sustainability; modest rise in inflation expectations; higher sovereign yields and risk premia globally; tighter financial conditions and higher borrowing costs.
- Staff estimates for Finland:
  - Real GDP would fall around 1.7 percent below staff’s baseline in 2027, with output losses persisting over the long term.
  - In the medium term, the GDP decline is larger than in the euro area average, reflecting Finland’s relatively high trade openness and exposure to investment cycles.
  - Inflation would decline modestly as weaker demand and lower energy prices outweigh tariff-induced cost pressures.
  - Fiscal and external positions would deteriorate versus the baseline: lower growth reduces revenues and raises social protection expenditures; fiscal deficit widens and debt-stabilization slows; higher global risk premia raise sovereign borrowing costs; banks’ reliance on short-term wholesale funding raises funding costs; exports decline; income balance, current account and NIIP weaken.

- Adverse scenario — Selected indicator deviations from baseline:
  - Real GDP (in percent of baseline):
    - 2025: 0.0
    - 2026: -1.2
    - 2027: -1.7
    - 2028: -1.7
    - 2029: -1.1
    - 2030: -0.5
  - HICP Inflation (period average) (deviation from baseline):
    - 2025: 0.0
    - 2026: -0.1
    - 2027: -0.2
    - 2028: -0.3
    - 2029: -0.4
    - 2030: -0.3
  - Fiscal Balance (percent of GDP) (deviation from baseline):
    - 2025: 0.0
    - 2026: -0.8
    - 2027: -1.1
    - 2028: -1.1
    - 2029: -0.8
    - 2030: -0.5

### Baseline projections (selected series)
- Real GDP growth (percent year-on-year):
  - 2025: 0.2
  - 2026: 0.2
  - 2027: 0.9
  - 2028: 1.4
  - 2029: 1.8
  - 2030: 1.8
- HICP Inflation (period average):
  - 2025: 1.8
  - 2026: 1.6
  - 2027: 1.8
  - 2028: 1.7
  - 2029: 1.6
  - 2030: 1.7
- Fiscal Balance (percent of GDP):
  - 2025: -4.5
  - 2026: -4.5
  - 2027: -4.7
  - 2028: -4.3
  - 2029: -4.2
  - 2030: -3.8

### Policy advice for the adverse scenario
- General stance:
  - Allow automatic stabilizers to operate around the structural tightening path proposed by staff.
  - Discretionary fiscal stimulus is not recommended given Finland’s high public debt and structural spending pressures.
  - Endogenous monetary policy in the euro area—via weaker demand and lower inflation—would ease financial conditions.
- Near-term and medium-term recommendations:
  - Maintain fiscal credibility to rebuild buffers and reinforce confidence.
  - Implement remaining FSAP recommendations—especially addressing wholesale-funding vulnerabilities—to strengthen financial resilience.
  - Advance structural reforms to raise potential growth and support investment.
  - Deepen the EU single market, strengthen green and digital transitions, and diversify export markets to mitigate vulnerability to global trade fragmentation.

---

### Policy priorities — A. Restarting fiscal consolidation (key figures and recommendations)
- Context and risks:
  - Authorities’ April 2025 mid-term policy package included expansionary measures over 2026-29: reduction in personal and corporate income tax and higher defense spending, offset by modest expenditure cuts.
  - September 2025 modest consolidation measures: 0.3 percent of GDP over 2026-28.
  - Structural primary balance projected to improve somewhat in 2026, but overall deficit will stay above 3 percent and debt-to-GDP ratio will reach 95 percent by the end of the decade.
  - Expenditure pressures will intensify in the long term due to defense spending and the climate transition.
- Staff recommendation:
  - Staff support the authorities’ proposed fiscal stance in 2026, showing a tightening around ½ percent of GDP in the structural primary balance.
  - Continue to consolidate by ½ percent of GDP per year from 2027 until the fiscal balance is closed and debt is on a declining path.
  - If downside risks materialize, structural adjustment should continue while allowing automatic stabilizers to operate.
- Fiscal strategy and instruments:
  - Focus consolidation on rationalizing spending; prioritize efficiency and prioritization efforts on social protection, education, and health spending.
  - Consider revenue measures including:
    - Raise 14 percent reduced VAT rates to standard 25.5 percent: 0.3 (Percent of GDP).
    - Raise taxes on immovable property to OECD average: 0.3.
    - Indexation of motor vehicle duties and excise tax: 0.2.
    - Abolish tax expenditures on fossil fuels: 0.5.
  - Consider expenditure savings options (illustrative, Percent of GDP):
    - Improve spending efficiency of Welfare Services Counties: 0.2
    - Reduce corporate subsidies: 0.4
    - Raise means-tested out-of-pocket payments of home-based long-term care: 0.4
    - Efficiency gains in non-pension social transfers (Annex VII): 0.6
    - Measures to be identified by expenditure reviews: 0.5-0.7

---

### Macroprudential buffers and financial stability priorities
- Main findings on banking sector resilience:
  - Maintain the systemic risk buffer (SyRB) on credit institutions at 1 percent given structural vulnerabilities.
  - Banks’ heavy reliance on wholesale funding warrants higher liquidity buffers to:
    - cover wholesale funding outflows over a five-day horizon, and
    - increase the stock of high-quality liquid assets.
  - Stress tests indicate capital and profitability positions remain strong, but current capital buffers are insufficient to cover a large drop in the CET1 ratio under adverse scenarios.
  - Staff supports preparatory work for a joint Nordic-Baltic banking sector stress test in 2026.

- Positive Neutral Counter-Cyclical Capital Buffer (PN-CCyB):
  - Current estimates for Finland:
    - PN-CCyB of between 0.75 and 1 percent.
    - 2023 FSAP solvency stress test resulted in an estimated 0.75 percent PN-CCyB for a representative Finnish bank.
    - Losses-to-Buffer approach suggests a 1 percent PN-CCyB would be suitable.
  - Staff recommendation:
    - Introduce a PN-CCyB on top of existing capital requirements while keeping current macroprudential buffers in place.
    - Gradual build-up of the PN-CCyB is advised to mitigate potential adverse effects on bank lending.

- Borrower-based measures and household debt:
  - Recommendation:
    - Do not relax borrower-based measures given elevated household debt.
    - Maintain current loan-to-value (LTV) limits and loan maturities.
    - Add debt-to-income and debt-service-to-income limits to the borrower-based toolkit.
  - Context:
    - April 2025 government proposals to ease housing regulations are unlikely to significantly stimulate housing transactions because weak housing demand—rather than financial constraints—is the main constraint.

- Consolidated staff recommendations (policy actions):
  - Maintain SyRB at 1 percent for credit institutions.
  - Consider gradually phasing in a PN-CCyB, calibrated in the range of 0.75 percent to 1 percent.
  - Keep existing macroprudential buffers in place when introducing a PN-CCyB.
  - Enhance bank liquidity buffers to cover wholesale funding outflows over a five-day horizon and increase holdings of high-quality liquid assets.
  - Preserve a clear macroprudential mandate for the FIN-FSA with a well-defined financial stability objective.
  - Pursue greater harmonization of O-SII buffer methodology and facilitate reciprocation of SyRB at the EU level.

---

### Labor market, education, AI, and integration policies
- Labor supply and integration of immigrants:
  - Less generous unemployment benefits, curtailed access to early retirement, and streamlined work-based immigration procedures have contributed to the increase in labor supply.
  - These initiatives should be complemented by measures to promote the integration of immigrants and facilitate their employment.
- Tertiary education capacity and funding:
  - Weakened tertiary education attainment highlights the need for targeted reforms.
  - Limit scope for students to pursue more than one degree at the same level—except in fields with clear labor market needs—to free up capacity for first-time entrants.
  - Given tight public funding, increased private contributions and the introduction of student fees should be considered.
- Capturing AI benefits and firm scaling:
  - Finland is well-prepared to reap AI benefits but faces challenges in scaling up firms.
  - Review domestic regulations and advocate further European integration to access larger markets.
- Labor market impacts of AI and policy responses:
  - Rapid AI adoption could reshape jobs and accelerate displacement.
  - Upskilling and reskilling and adapting ALMP will be crucial to facilitate labor reallocation.

---

### Selected macro-financial statistics and outlook (high-frequency and medium-term)
- GDP growth (Percentage change):
  - 2022: 0.8
  - 2023: -0.9
  - 2024: 0.4
  - 2025: 0.2
  - 2026: 1.5
  - 2027: 1.5
  - 2028: 1.3
  - 2029: 1.2
  - 2030: 1.2
  - 2031: 1.2
- HICP Consumer price inflation (harmonized, average):
  - 2022: 7.2
  - 2023: 4.3
  - 2024: 1.0
  - 2025: 1.8
  - 2026: 1.7
  - 2027: 2.0
- Participation Rate (15-74 years): 2022: 68.0; 2023: 68.6; 2024: 69.0; 2025: 69.4; 2026: 69.7.
- Unemployment rate (in percent): 2022: 6.8; 2023: 7.2; 2024: 8.4; 2025: 9.0; 2026: 8.7.
- Household indebtedness (total household debt, percent of GDP):
  - 2018: 64.0
  - 2019: 64.8
  - 2020: 65.3
  - 2021: 69.0
  - 2022: 68.1
  - 2023: 65.9
  - 2024: 64.0
  - 2025Q2: 63.1 (Table 4 memorandum)
- Banking sector indicators:
  - Regulatory Capital to Risk-Weighted Assets: 2024: 21.5; 2025Q2: 21.5.
  - Non-performing Loans to Total Gross Loans: 2024: 1.4; 2025Q2: 1.5.
  - Return on Equity: 2024: 14.6; 2025Q2: 13.5.

---

### Annex I — Debt Sustainability: baseline trajectory and key metrics
- Overall risk of sovereign stress: Low.
- Medium term: Low.
- Long term: Moderate (aging-related expenditures on health and social security feed into debt dynamics).
- Public debt (Percent of GDP), actual and projections:
  - 2024: 82.1
  - 2025: 88.3
  - 2026: 90.3
  - 2027: 90.8
  - 2028: 92.6
  - 2029: 94.2
  - 2030: 95.5
  - 2031: 98.7
  - 2032: 101.2
  - 2033: 103.6
  - 2034: 105.9
- Change in public debt (Percent of GDP):
  - 2025: 6.2
  - 2026: 2.0
  - 2027: 0.5
  - 2028: 1.8
  - 2029: 1.5
  - 2030: 1.4
- Primary deficit (Percent of GDP):
  - 2024: 4.4
  - 2025: 4.0
  - 2026: 2.9
  - 2027: 2.3
  - 2028: 2.2
  - 2029: 2.5
  - 2030: 2.5
- Gross financing needs (GFN) (Percent of GDP):
  - 2024: 9.4
  - 2025: 9.4
  - 2026: 17.8
  - 2027: 18.0
  - 2028: 20.5
  - 2029: 23.3
  - 2030: 23.8
- Debt fanchart and medium-term indices:
  - Debt fanchart width (percent of GDP): 33.4
  - Probability of debt non-stabilization (percent): 6.1
  - Debt fanchart index (DFI): 0.7 (Risk signal: Low)
  - Average baseline GFN (percent of GDP): 18.8 (GFI: 8.2; Risk signal: Moderate)
  - Medium-term index value: 0.2 (Final assessment: Low)
- Memo — Real GDP growth (percent):
  - 2024: 0.4
  - 2025: 0.2
  - 2026: 1.5
  - 2027: 1.5
  - 2028: 1.3
  - 2029: 1.2
  - 2030: 1.2
- Commentary: Public debt is expected to continue growing in the medium and long term, mainly driven by recurrent primary deficits.

---

### Annex III — Risk Assessment Matrix (top global and domestic risks and policy responses)
- Global risks (High likelihood):
  - Geopolitical tensions — Impact: High.
    - Policy response: Strengthen energy security and diversify supply chains; targeted fiscal support; allow automatic stabilizers while continuing gradual structural adjustment; safeguard trade, investment, and financial stability.
  - Financial market volatility and correction — Likelihood: High; Impact: Medium.
    - Policy response: Maintain strong macroprudential oversight; advance crypto regulation in line with EU frameworks; ensure contingency plans.
  - Commodity price volatility — Likelihood: High; Impact: Medium.
    - Policy response: Allow automatic stabilizers and continue gradual structural adjustment.
  - Fiscal vulnerabilities and higher long-term interest rates — Likelihood: High; Impact: High.
    - Policy response: Maintain credible medium-term fiscal framework; growth-friendly consolidation; strengthen sovereign debt management.
  - Escalating trade measures and prolonged uncertainty — Likelihood: High; Impact: High.
    - Policy response: Diversify export markets; support firms in adjusting supply chains; maintain credible fiscal and monetary policies.
  - Cyberthreats — Likelihood: High; Impact: Medium.
    - Policy response: Raise public awareness; strengthen cyber defense; conduct cyber stress tests.

- Regional and domestic risks (Medium or High likelihood):
  - Prolonged housing market weakness — Likelihood: Medium; Impact: High.
    - Policy response: Strengthen bank capital and liquidity buffers; Nordic-wide stress tests; introduce PN-CCyB and maintain borrower-based measures.
  - Persistently high unemployment — Likelihood: Medium; Impact: High.
    - Policy response: Advance labor-market reforms; strengthen ALMP and training programs.
  - Social discontent — Likelihood: Medium; Impact: Medium.
    - Policy response: Provide targeted support to vulnerable groups while maintaining a credible medium-term fiscal path.

---

### Annex VI — FSAP 2023 Key Recommendations (selected status)
- Oversight — resource and independence measures:
  - Increase resources available to the FIN-FSA, FFSA and other oversight agencies: Implemented.
  - Secure FIN-FSA's independence (legislative review ongoing): Not Implemented, but Initiated (possible legislative changes expected by June 2026).
- Macroprudential policy:
  - Add DTI and DSTI limits; introduce a positive CCyB: Not Implemented.
  - Enhance systemic risk monitoring; positive credit registry first stage functional: Partially Implemented.
- Systemic risk assessment:
  - Enhance liquidity buffers to cover wholesale funding outflows over a five-day horizon: Not Implemented.
  - Conduct Nordic-wide stress test: Partially Implemented (actual stress testing to be conducted in 2026).
- Banking regulation and supervision:
  - IFRS-9 analysis and publication: Implemented (October 2024).
  - Improve governance rules for independent directors: Partially Implemented (discussion paper; possible changes in 2027).
- Nonbank financial institutions:
  - Pension reform increasing allowed equity weight and lowering solvency limit: Not Implemented, but Initiated (legislative changes expected in 2026; reform could take effect in 2027).
- Crisis management:
  - Centralize cross-authority crisis coordination: Implemented.

(Timing legend in source: C = Continuous; I = Immediate (within one year); NT = Near Term (within 1–3 years); MT = Medium Term (within 3–5 years).)

---

### Annex VIII — Data issues (summary)
- Data Adequacy Assessment Rating: A.
- Sectoral ratings (median and detailed): A across National Accounts, Prices, Government Finance Statistics, Monetary and Financial Statistics; External Sector Statistics overall A but consistency flagged.
- External Sector consistency: assessed as "B" due to significant errors and omissions in Balance of Payments estimates, which "average around 2 percent of GDP over the previous decade."
- Major project: Statistics Finland designing a new IT system for national accounts and balance of payments, scheduled to be operational in 2029.
- Interim dedicated sub-project scheduled from February 1, 2025, to January 31, 2027 to improve internal consistency and reduce net errors and omissions.
- Finland adheres to the Special Data Dissemination Standard (SDDS) Plus since June 2018.

*Source: IMF staff box "Exposure to Trade Disruptions and U.S. Tariffs" and related sections in the Finland country report content unit provided in the PDF.*

### 1. Exposure to Trade Disruptions and U.S. Tariffs _________________________________________________ 5

### 1. Exposure to Trade Disruptions and U.S. Tariffs

### Export Structure and Exposure
- Goods and services exports account for over 40 percent of GDP.
- A significant share of exports is concentrated in capital goods, intermediate products, and specialized services.
- The U.S. accounts for about 10 percent of Finland’s goods exports; these exports account for 6 percent of GDP when indirect links are included.
- Finland’s trade-weighted tariff rate on U.S. exports stands at 15 percent, lower than that of most EU countries.

### U.S.–EU Tariff Agreement and Finland’s Position
- In July 2025 the U.S. and EU reached an agreement capping reciprocal tariffs at 15 percent and exempting strategic sectors, including pharmaceuticals, semiconductors, and selected chemicals.
- Considered in the context of this agreement, Finland’s trade-weighted tariff rate is 15 percent.

### Realized Trade Flows through 2025Q3
- Nominal exports were broadly flat in 2025Q2/Q3.
- Real exports grew by about 1.9 percent YoY up to 2025Q3, reflecting lower export prices.
- Export volumes grew 3.2 percent YoY up to 2025Q3, while import volumes grew by about 0.7 percent (noting weak domestic demand).
- High-frequency indicators show little evidence of ‘front loading’ in 2025Q1.
- Export values declined as falling prices led to a modest deterioration in the terms-of-trade (see broader text on trade prices and terms-of-trade).

### Measured Exposure via Domestic Value-Added (DVA)
- Direct exposure of Finland’s DVA exports to a potential increase in U.S. tariffs: 0.7 percent of GDP.
- Indirect exposure of Finland’s DVA exports to a potential increase in U.S. tariffs: 0.7 percent of GDP.
- Total reported exposure (Direct + Indirect) shown in source figures and discussed in text.

### Trade Elasticities and Comparative Positioning
- The trade-weighted tariff on U.S. exports rose to 15 percent.
- Trade elasticity estimates (weighted average of U.S. imports from European countries) place Finland among mid-range European countries in the displayed ordering (Finland labeled in charts; exact elasticity values shown in source figures).

### Risks and Channels of Impact
- Persisting uncertainty about future U.S. trade policy continues to dampen business sentiment.
- Indirect spillovers are material given strong integration of Finnish exporters within European value chains, particularly through Germany and Sweden.
- The potential for higher trade elasticities over the long term increases downside risk to exports and investment.
- Escalating trade tensions could:
  - Weigh on trade and investment.
  - If supply chain bottlenecks re-emerge, reignite inflationary pressures.
  - Increase NPLs, especially in manufacturing.
  - Weigh on demand and investor confidence in a protracted period of global fragmentation.
- Cyber threats and global financial-market volatility are noted as additional vulnerabilities that can amplify trade-disruption effects.

### Near-Term Assessment
- Overall, trade patterns have not been materially altered so far through 2025Q3, but significant downside risks remain.
- The external position for 2025 is assessed to be broadly in line with medium-term fundamentals and desirable policies (Annex II reference in source).

*Source: IMF staff box "Exposure to Trade Disruptions and U.S. Tariffs" in the Finland country report content unit.*

### Box 2. Finland: Macroeconomic Forecasts and Policy Advice to Manage an Adverse Scenario

### Box 2. Finland: Macroeconomic Forecasts and Policy Advice to Manage an Adverse Scenario

### Adverse scenario overview and macroeconomic impact
- Scenario assumptions (based on October 2025 WEO risk assessment, Box 1.2, Scenario A): permanently higher U.S. tariffs without broad retaliation; tighter global financial conditions; reassessment of public-debt sustainability; modest rise in inflation expectations; higher sovereign yields and risk premia globally; tighter financial conditions and higher borrowing costs.
- For Finland (small open economy integrated in global value chains), staff estimate:
  - Real GDP would fall around 1.7 percent below staff’s baseline in 2027, with output losses persisting over the long term.
  - In the medium term, the GDP decline is larger than in the euro area average, reflecting Finland’s relatively high trade openness and exposure to investment cycles.
  - Inflation would decline modestly as weaker demand and lower energy prices outweigh tariff-induced cost pressures.
  - Fiscal and external positions would deteriorate versus the baseline: lower growth reduces revenues and raises social protection expenditures; fiscal deficit widens and debt-stabilization slows; higher global risk premia raise sovereign borrowing costs; banks’ reliance on short-term wholesale funding raises funding costs; exports decline; income balance, current account and NIIP weaken.

### Adverse scenario: Selected economic indicators (deviation from baseline)
- Real GDP (in percent of baseline):
  - 2025: 0.0
  - 2026: -1.2
  - 2027: -1.7
  - 2028: -1.7
  - 2029: -1.1
  - 2030: -0.5
- HICP Inflation (period average) (deviation from baseline):
  - 2025: 0.0
  - 2026: -0.1
  - 2027: -0.2
  - 2028: -0.3
  - 2029: -0.4
  - 2030: -0.3
- Fiscal Balance (percent of GDP) (deviation from baseline):
  - 2025: 0.0
  - 2026: -0.8
  - 2027: -1.1
  - 2028: -1.1
  - 2029: -0.8
  - 2030: -0.5

### Baseline projections (selected series)
- Real GDP growth (percent year-on-year):
  - 2025: 0.2
  - 2026: 0.2
  - 2027: 0.9
  - 2028: 1.4
  - 2029: 1.8
  - 2030: 1.8
- HICP Inflation (period average):
  - 2025: 1.8
  - 2026: 1.6
  - 2027: 1.8
  - 2028: 1.7
  - 2029: 1.6
  - 2030: 1.7
- Fiscal Balance (percent of GDP):
  - 2025: -4.5
  - 2026: -4.5
  - 2027: -4.7
  - 2028: -4.3
  - 2029: -4.2
  - 2030: -3.8

### Policy advice for the adverse scenario
- General stance:
  - Allow automatic stabilizers to operate around the structural tightening path proposed by staff.
  - Discretionary fiscal stimulus is not recommended given Finland’s high public debt and structural spending pressures.
  - Endogenous monetary policy in the euro area—via weaker demand and lower inflation—would ease financial conditions.
- Near-term and medium-term recommendations:
  - Maintain fiscal credibility to rebuild buffers and reinforce confidence.
  - Implement remaining FSAP recommendations—especially addressing wholesale-funding vulnerabilities—to strengthen financial resilience.
  - Advance structural reforms to raise potential growth and support investment.
  - Deepen the EU single market, strengthen green and digital transitions, and diversify export markets to mitigate vulnerability to global trade fragmentation.

### Policy priorities — A. Restarting fiscal consolidation
- Context and risks:
  - Authorities’ April 2025 mid-term policy package included expansionary measures over 2026-29: reduction in personal and corporate income tax and higher defense spending, offset by modest expenditure cuts.
  - September 2025 modest consolidation measures: 0.3 percent of GDP over 2026-28.
  - Structural primary balance projected to improve somewhat in 2026, but overall deficit will stay above 3 percent and debt-to-GDP ratio will reach 95 percent by the end of the decade (Annex I).
  - Expenditure pressures will intensify in the long term due to defense spending and the climate transition.
- Staff recommendation:
  - Further consolidation is needed: staff support the authorities’ proposed fiscal stance in 2026, showing a tightening around ½ percent of GDP in the structural primary balance.
  - More effort is needed from 2027: continue to consolidate by ½ percent of GDP per year until the fiscal balance is closed and debt is on a declining path.
  - If downside risks materialize (as in Box 2), structural adjustment should continue while allowing automatic stabilizers to operate.
- Fiscal strategy and instruments:
  - Focus consolidation on rationalizing spending given already high tax burden and greater scope on expenditure side.
  - Prioritize efficiency and prioritization efforts on social protection, education, and health spending.
  - Authorities’ decision to perform regular expenditure reviews is welcomed.
  - Revenue mobilization measures to consider: reducing VAT rate segmentation, fuel excise indexation, updating the cadaster and increasing property tax rates, and expansion of carbon taxes.
  - Pension system: well financed; past reforms and large pension fund assets mean any additional adjustments would likely lower pension contributions from current workers and could allow scope for other tax changes without increasing overall revenue base.

### Illustrative menu of consolidation options (Percent of GDP)
- Expenditure measures:
  - Improve spending efficiency of Welfare Services Counties: 0.2
  - Reduce corporate subsidies: 0.4
  - Raise means-tested out-of-pocket payments of home-based long-term care: 0.4
  - Efficiency gains in non-pension social transfers (Annex VII): 0.6
  - Measures to be identified by expenditure reviews 1/: 0.5-0.7
  - Pension reform: TBC
  - Introduce fees for tertiary education: TBC
- Revenue measures:
  - Raise 14 percent reduced VAT rates to standard 25.5 percent: 0.3
  - Raise taxes on immovable property to OECD average: 0.3
  - Indexation of motor vehicle duties and excise tax: 0.2
  - Abolish tax expenditures on fossil fuels: 0.5
  - Expand carbon taxation: TBC
- Note:
  - 1/ Potential saving identified in the last spending review that took place in 2023.
  - TBC = to be costed.

### Box 3 — The New National Fiscal Rules (design and governance)
- Implementation timing: Finland will enact new national fiscal rules in January 2026.
- Key features:
  - Ensure consistency with the EU fiscal framework and add national fiscal targets, a debt anchor, and an additional layer to the correction mechanism.
  - Strengthen parliamentary involvement in fiscal planning; Parliamentary Pact for Fiscal Policy has broad cross-party buy-in.
  - Expand role of the Finnish Economic Policy Council (FEPC) as Finland’s independent fiscal institution with strengthened independence in legislation.
- Targets and assessment mechanism:
  - Two fiscal balance targets set by a Parliamentary Working Group for Fiscal Policy (PWGFP): target for the government term (four years) set ahead of national elections and monitored by FEPC; inter-parliamentary target set at the mid-point as an average fiscal balance target for the next eight years.
  - The inter-parliamentary target requires a 0.75 percentage point annual decrease in the debt-to-GDP ratio averaged over eight years while debt-to-GDP is above 40 percent, after a transition period.
  - FEPC assesses compliance; if target unlikely to be achieved or overall fiscal balance weaker than -2.5 percent of GDP, FEPC provides assessment of corrective measures; government must take corrective actions or publicly explain reasons (“comply or explain”).
  - Framework seeks to avoid pro-cyclical fiscal adjustment through escape clauses and FEPC’s holistic assessment.
- Expected outcome:
  - If successful, the new rules will help anchor fiscal policy, build policy space, and reduce risks to market confidence; fiscal targets are expected to be broadly consistent with staff’s recommended fiscal path.

### Policy priorities — B. Safeguarding financial stability
- Banking system resilience:
  - Banks’ capital and profitability positions remain strong.
  - EBA/ECB and national stress tests conclude Finnish banks could withstand a severe economic slowdown amid elevated uncertainty.
  - Continued heavy reliance on short-term wholesale funding poses financial stability risks (IMF FSAP, 2022).
  - Without severe liquidity shocks, the financial sector is well placed to support recovery.
- Sectoral risks:
  - Real estate market risks:
    - Banks have large real estate exposures versus European peers.
    - Residential real estate prices stabilized in 2025 and do not appear overvalued; housing activity remains weak.
    - Commercial real estate (CRE) faces elevated risks: declining asset valuations, low transaction levels, rising vacancies.
    - CRE asset value and return indicators: property income yield (net), asset value growth, MSCI total return index show declines (figures in source).
  - Household sector risks:
    - NPLs are contained; households have started to deleverage.
    - Household debt remains high by European standards but concentrated among higher-income households and non-first-time home buyers.
    - Falling interest rates supported disposable income; a steep rise in unemployment could worsen household credit quality.
  - Corporate sector risks:
    - Debt service burden on NFCs remains elevated.
    - NPLs increased in some sectors (construction and accommodation and food service activities represent about 5 percent of corporate bank lending).
    - Trade uncertainty and U.S. tariffs may heighten credit risks for exporting firms; prolonged housing downturn could hurt construction companies.
  - Cross-border risks:
    - Finnish financial sector is large and highly interconnected with significant direct lending to other Nordic countries’ CRE and construction sectors.
    - Staff support preparatory work for a joint Nordic-Baltic banking sector stress test in 2026.
  - Real estate funds:
    - Redemption pressures from open-ended real estate funds have continued.
    - Funds used liquidity management tools (temporary suspensions on redemptions) to mitigate fire-sale risks; valuations still declining at slower pace.
  - Pension sector:
    - New pension reform proposal (January 2025) allows private pension providers to increase equity investments; solvency limit will be lowered per 2023 FSAP recommendation.
    - Measures reduce procyclical investment behaviors; solvency ratios remain strong and long-term financing of pension funds will be strengthened.
  - Cyber-risks:
    - Customers and businesses increasingly affected by scams and phishing attempts.
    - After a large DDoS attack in 2024H2, frequency of cyberattacks targeting banks declined in 2025 and impact on financial stability was mitigated.
    - Cyber risks could further increase due to rapid AI development and continued geopolitical tensions.

*Source: IMF staff calculations and Finland country team material contained in the provided PDF content.*

### 21.      Macroprudential buffers should be enhanced

### 21.      Macroprudential buffers should be enhanced

### Main findings on banking sector resilience
- The systemic risk buffer (SyRB) on credit institutions should be maintained at 1 percent given structural vulnerabilities, including the large interconnectedness in the region.
- Banks heavily rely on wholesale funding, posing liquidity risks that warrant higher liquidity buffers to:
  - cover wholesale funding outflows over a five-day horizon, and
  - increase the stock of high-quality liquid assets.
- Credit risks require diligent monitoring, particularly banks’ real estate valuation practices and credit risk management for housing company loans.
- Stress tests indicate banks’ capital and profitability positions remain strong, but current capital buffers are insufficient to cover a large drop in the CET1 ratio under adverse scenarios.
- Sectoral risks: large real estate exposures, weak housing activity, and elevated CRE sector risks.
- Staff supports preparatory work for a joint Nordic-Baltic banking sector stress test in 2026 because of high cross-border interconnectedness.

### Positive Neutral Counter-Cyclical Capital Buffer (PN-CCyB) — Box 4
- Rationale:
  - A PN-CCyB creates releasable capital even when the credit-to-GDP is below its trend, helping mitigate risks not related to excessive domestic credit growth.
  - Rapid credit contraction can occur in any phase of the credit cycle (demonstrated during the pandemic).
- Current estimates for Finland:
  - PN-CCyB of between 0.75 and 1 percent.
  - The 2023 FSAP solvency stress test calibrated a PN-CCyB as the residual between other macroprudential buffers and the estimated maximum capital reduction under adverse scenarios, resulting in an estimated 0.75 percent PN-CCyB for a representative Finnish bank.
  - The Losses-to-Buffer approach suggests a 1 percent PN-CCyB would be suitable given high profitability of Finnish banks.
- Staff recommendation:
  - Introduce a PN-CCyB on top of existing capital requirements while keeping current macroprudential buffers in place.
  - Gradual build-up of the PN-CCyB is advised to mitigate potential adverse effects on bank lending, leveraging favorable banking conditions (e.g., strong bank profitability).
- Benchmark: Following the pandemic, many macroprudential authorities across Europe have introduced a PN-CCyB, typically ranging between 0.5 percent and 2 percent, without reducing other existing capital requirements.

### Borrower-based measures and household debt
- Recommendation:
  - Do not relax borrower-based measures given elevated household debt.
  - Maintain current loan-to-value (LTV) limits and loan maturities.
  - Add debt-to-income and debt-service-to-income limits to the borrower-based toolkit (Annex III).
- Context:
  - April 2025 government proposals to ease housing regulations are unlikely to significantly stimulate housing transactions because weak housing demand—rather than financial constraints—is the main constraint.
  - The FIN-FSA identified shortcomings in banks’ valuation practices for real estate collateral and credit risk management for housing company loans.

### EU-level harmonization and reciprocation
- Recommendation:
  - Harmonize methodology for setting buffers on other systemically important institutions (O-SII) at the EU level, while allowing flexibility for country specificities.
  - Harmonization across jurisdictions would minimize complexity and ensure a predictable regulatory environment.
  - Reciprocation of macroprudential measures remains important to effectively cover cross-border risks and maintain a level playing field.

### Authorities’ views (summary)
- Authorities assessed the financial sector as resilient despite weak macroeconomic environment and heightened geopolitical tensions.
- Authorities and staff agreed that a releasable capital buffer through a PN-CCyB would bolster resilience.
- Authorities did not see a need for higher overall capital requirements based on current risk assessments and policy settings.
- Concerns:
  - Bank of Finland and FIN-FSA cautioned that easing housing regulations could gradually increase financial stability risks and complicate macroprudential policy, potentially undermining FIN-FSA independence.
  - Ministry of Finance viewed proposed institutional changes as limited in scope and not intended to impact FIN-FSA independence broadly.

### Consolidated staff recommendations (policy actions)
- Maintain SyRB at 1 percent for credit institutions.
- Consider gradually phasing in a PN-CCyB, with calibration in the range of 0.75 percent to 1 percent.
- Keep existing macroprudential buffers in place when introducing a PN-CCyB.
- Enhance bank liquidity buffers to cover wholesale funding outflows over a five-day horizon and increase holdings of high-quality liquid assets.
- Maintain current borrower-based measures (LTV limits and loan maturities) and add debt-to-income and debt-service-to-income limits to the toolkit.
- Preserve a clear macroprudential mandate for the FIN-FSA with a well-defined financial stability objective.
- Pursue greater harmonization of O-SII buffer methodology and facilitate reciprocation of SyRB at the EU level.

*IMF staff assessment from the chapter "Macroprudential buffers should be enhanced."*

### 37.      Labor market reforms should be complemented by efforts to integrate foreign labor and

### Labor market reforms should be complemented by efforts to integrate foreign labor and targeted tertiary education reforms

### Labor supply and integration of immigrants
- Less generous unemployment benefits, curtailed access to early retirement, and streamlined work-based immigration procedures have contributed to the increase in labor supply, with ongoing additional policy efforts.
- These initiatives should be complemented by measures to promote the integration of immigrants and facilitate their employment.

### Tertiary education capacity and funding
- Weakened tertiary education attainment highlights the need for targeted reforms.
- Limiting the scope for students to pursue more than one degree at the same level—except in fields with clear labor market needs—would free up capacity for first-time entrants.
- Given tight public funding, increased private contributions and the introduction of student fees should be considered to maintain the quality of education while expanding capacity.

### Capturing AI benefits and firm scaling
- Indicators on innovation, digitalization and AI preparedness suggest that Finland has a strong basis to create innovative startups and is well-prepared to reap the benefits of AI.
- However, Finland faces challenges in scaling up firms.
- Finland should review domestic regulations and continue to advocate for further European integration, as reducing internal barriers at the EU-level will be beneficial for the Finnish companies to access larger markets.

### Labor market impacts of AI and policy responses
- AI has the potential to significantly enhance productivity across several sectors and occupations, but its rapid adoption might reshape the job landscape and lead to faster- and larger-than-expected job displacement.
- Therefore, upskilling and reskilling the labor force and adapting ALMP to facilitate labor reallocation will be crucial.

*Source: Excerpt from IMF content unit 1finea2026001-source-pdf - 37.*

### 39.      It is proposed that the next Article IV consultation with Finland take place on the standard

### Finland: Article IV Consultation and Economic Overview

### Consultation Timing
- It is proposed that the next Article IV consultation with Finland take place on the standard 12-month cycle.

### Real Sector
- GDP edged up in 2024, supported by net exports and public spending; consumption remains weak despite real disposable income growth.
- Construction investment remained weak through 2024, with some early sign of recovery in 2025.
- Confidence indicators point to a recovery in services and retail, while construction and industry remain negative.
- Weak demand remains a key constraint on both manufacturing and services output, while supply constraints have eased significantly.
- Quarterly real GDP growth contributions (Percent, QoQ) show components: Private Consumption, Public Consumption, Private Investment, Public Investment, Net Exports, Inventories & discrepancy, RGDP (rhs).
- From Table 1: GDP growth (Percentage change) — 2022: 0.8; 2023: -0.9; 2024: 0.4; 2025: 0.2; 2026: 1.5; 2027: 1.5; 2028: 1.3; 2029: 1.2; 2030: 1.2; 2031: 1.2.
- Domestic demand (Percentage change) — 2022: 2.7; 2023: -4.2; 2024: -0.3; 2025: -0.3; 2026: 1.5; 2027: 1.7; 2028: 1.6; 2029: 1.4; 2030: 1.4; 2031: 1.4.
- Net exports (contribution to growth in percent of GDP) — 2022: -2.0; 2023: 2.9; 2024: 1.1; 2025: 1.2; 2026: -0.1; 2027: -0.2; 2028: -0.3; 2029: -0.2; 2030: -0.2; 2031: -0.2.

### Prices, Costs, and Income
- Consumer price inflation (harmonized, average) — 2022: 7.2; 2023: 4.3; 2024: 1.0; 2025: 1.8; 2026: 1.7; 2027: 2.0; 2028: 2.0; 2029: 2.0; 2030: 2.0; 2031: 2.0.
- Consumer price inflation (harmonized, end-year) — 2022: 8.8; 2023: 1.3; 2024: 1.6; 2025: 1.7; 2026: 2.0; 2027: 2.0; 2028: 2.0; 2029: 2.0; 2030: 2.0; 2031: 2.0.
- GDP deflator (Percentage change) — 2022: 6.2; 2023: 3.5; 2024: 0.7; 2025: 1.4; 2026: 1.9; 2027: 2.2; 2028: 1.9; 2029: 2.1; 2030: 2.4; 2031: 2.3.
- Unit labor cost, manufacturing — 2022: 13.3; 2023: 6.7; 2024: -2.7; 2025: 0.0; 2026: 1.9; 2027: 2.3; 2028: 1.8; 2029: 2.0; 2030: 2.1; 2031: 2.1.

### Labor Market
- Participation Rate (15-74 years) — 2022: 68.0; 2023: 68.6; 2024: 69.0; 2025: 69.4; 2026: 69.7; 2027: 70.2; 2028: 70.8; 2029: 71.2; 2030: 71.7; 2031: 72.2.
- Employment (Percentage change) — 2022: 2.6; 2023: 0.3; 2024: -0.9; 2025: -0.4; 2026: 0.4; 2027: 0.5; 2028: 0.6; 2029: 0.6; 2030: 0.6; 2031: 0.6.
- Unemployment rate (in percent) — 2022: 6.8; 2023: 7.2; 2024: 8.4; 2025: 9.0; 2026: 8.7; 2027: 8.6; 2028: 8.6; 2029: 8.4; 2030: 8.3; 2031: 8.2.
- Finland’s participation peaks at mid-ages but is lower among youth and older men; foreign-born labor participation in Finland lags citizens averages.
- Finland’s tertiary attainment among youth is below most OECD countries and has stagnated since 2020; Finland’s “not in employment, education or training” rate exceeds peers but remains below the euro area average.
- Output gap (in percent of potential output) — 2022: 0.9; 2023: -0.9; 2024: -1.4; 2025: -1.7; 2026: -1.0; 2027: -0.7; 2028: -0.5; 2029: -0.3; 2030: -0.1; 2031: 0.0.
- Growth in potential output — 2022: 0.8; 2023: 0.8; 2024: 0.9; 2025: 0.5; 2026: 0.8; 2027: 1.2; 2028: 1.1; 2029: 1.0; 2030: 1.0; 2031: 1.1.

### Financial Conditions (FCI)
- Financial conditions in Finland have returned to their neutral levels and align with those of the rest of the euro area.
- Financial conditions have eased for the private sector but have tightened for the general government.
- Key drivers of easing include the price of risk, policy stance, and external factors.
- Sectoral FCI trends and drivers are presented for Households, Nonfinancial corporations, and General government, with 2025Q2 and 2025Q3 shown as forecasts in the series.

### Real Estate Market Developments
- After 2015, housing demand increased sharply in urban areas but was exceeded by a construction boom, leading to only modest house price rises.
- With recent declines, real house prices are below their 2014 levels and have declined relative to income and rents, showing no signs of overvaluation relative to the region.
- Housing activity sharply declined and has stabilized at low levels, supported by lower interest rates on housing loans.
- Average Interest Rate on Housing Loans (Percent): series plotted for on new housing loan drawdowns, on stock of housing loans, and 12-month Euribor; recent observation shows declines supporting stabilization.
- Housing demand and supply in Greater Helsinki (Region Uusimaa, Thousands): Completed Dwellings and Number of New Households presented; transactions and new housing loans series show low activity with new housing loans drawdowns in EUR billion (4Q trailing sum).

### Financial Sector
- The Finnish banking system is well capitalized and highly liquid, comparable to peer countries.
- The banking system is large with heavy reliance on wholesale funding.
- Pension funds’ solvency ratios are strong; pension funds’ assets are large relative to the size of the economy.
- Capitalization and Profitability (Percent): CET1 Ratio and Return on Equity series shown; CET1 Ratio and leverage measures indicate robust capitalization.
- Liquidity Coverage Ratio (Percent, 2024): Finland among high LCR peers (DNK, SWE, FIN, AUT, NLD, FRA).
- Banking sector size (EU; share of nominal GDP; percentages; 2024) and market funding structure (Percent, 2024) highlight reliance on deposits and debt securities to total liabilities.

### Household Balance Sheets
- Household indebtedness has declined in recent years but remains high by European standards.
- Financial net worth is low relative to European peers; most of household wealth is non-financial, mainly housing.
- Net financial wealth has increased recently, supported by an accumulation of cash and equity holdings and strong valuation gains.
- Households Assets (Percent of GDP) — series from 2018 to 2024 show Financial Assets, Real Estate Assets, Other Non-Financial Assets.
- Household Indebtedness Ratio (Financial liabilities Lhs: Percent of GDP; rhs: Percent of Disposable Income) — 2018Q2 to 2025Q2 series; total household debt (in percent of GDP) — 2018: 64.0; 2019: 64.8; 2020: 65.3; 2021: 69.0; 2022: 68.1; 2023: 65.9; 2024: 64.0; 2025Q2: 63.1 (Table 4 memorandum).

### Selected Economic and Fiscal Indicators (Tables)
- Table 1 highlights projections and historical series for output, prices, labor market, potential output, and general government finances for 2022–31. Notable fiscal and macro figures:
  - Overall balance (Percent of GDP) — 2022: -0.2; 2023: -2.9; 2024: -4.5; 2025: -4.5; 2026: -3.6; 2027: -3.5; 2028: -3.2; 2029: -3.3; 2030: -3.2; 2031: -3.1.
  - Primary balance (Percent of GDP) — 2022: -0.2; 2023: -3.0; 2024: -4.4; 2025: -4.1; 2026: -2.8; 2027: -2.4; 2028: -1.9; 2029: -1.9; 2030: -1.8; 2031: -1.7.
  - Gross debt (Percent of GDP) — 2022: 74.0; 2023: 77.1; 2024: 82.1; 2025: 88.3; 2026: 90.2; 2027: 90.7; 2028: 92.4; 2029: 94.0; 2030: 95.1; 2031: 96.2.
- Table 2 (Balance of Payments, Billions of euros and Percent of GDP) key lines:
  - Current Account (Billions of euros) — 2022: -6.4; 2023: -2.5; 2024: -1.9; 2025: 1.2; 2026: 0.8; 2027: 0.3; 2028: -0.1; 2029: -0.3; 2030: -0.1; 2031: 0.1.
  - Exports of goods and services (Percent of GDP) — 2022: 123.2; 2023: 116.8; 2024: 115.7; 2025: 116.1; 2026: 114.6; 2027: 117.6; 2028: 121.4; 2029: 125.7; 2030: 131.0; 2031: 136.5.
  - Gross external debt (Percent of GDP) — 2022: 215.8; 2023: 216.9; 2024: 203.5; 2025: 211.2; 2026: 215.6; 2027: 218.5; 2028: 223.0; 2029: 226.5; 2030: 229.3; 2031: 231.4.
- Table 3 (General Government Statement of Operations, Percent of GDP) highlights:
  - Revenue — 2022: 52.5; 2023: 53.0; 2024: 53.3; 2025: 53.8; 2026: 54.1; 2027: 53.6; 2028: 53.8; 2029: 54.0; 2030: 54.0; 2031: 54.0.
  - Expenditure — 2022: 52.6; 2023: 55.9; 2024: 57.8; 2025: 58.3; 2026: 57.7; 2027: 57.0; 2028: 57.0; 2029: 57.3; 2030: 57.2; 2031: 57.1.
  - Net Lending/Borrowing (Percent of GDP) — 2022: -0.2; 2023: -2.9; 2024: -4.5; 2025: -4.5; 2026: -3.6; 2027: -3.5; 2028: -3.2; 2029: -3.3; 2030: -3.2; 2031: -3.1.
- Table 4 (Financial Soundness Indicators, Ratios) selected entries:
  - Regulatory Capital to Risk-Weighted Assets — 2017: 21.4; 2018: 21.5; 2019: 20.5; 2020: 20.6; 2021: 20.6; 2022: 20.3; 2023: 20.7; 2024: 21.5; 2025Q2: 21.5.
  - Non-performing Loans to Total Gross Loans — 2017: 0.7; 2018: 1.0; 2019: 1.5; 2020: 1.5; 2021: 1.5; 2022: 1.4; 2023: 1.3; 2024: 1.4; 2025Q2: 1.5.
  - Return on Equity — 2017: 7.6; 2018: 26.2; 2019: 6.5; 2020: 6.2; 2021: 9.3; 2022: 9.5; 2023: 14.5; 2024: 14.6; 2025Q2: 13.5.
  - Total household debt (in percent of GDP) — 2017: 64.0; 2018: 64.8; 2019: 65.3; 2020: 69.0; 2021: 68.1; 2022: 65.9; 2023: 64.0; 2024: 63.1; 2025Q2: 62.3.
  - Change in housing price index (in percent, year average) — 2017: 1.1; 2018: 0.9; 2019: 0.4; 2020: 1.8; 2021: 4.6; 2022: 1.0; 2023: -6.2; 2024: -3.1; 2025Q2: -1.5.

*International Monetary Fund staff compilation from the provided Finland Article IV consultation materials.*

### Annex I. Debt Sustainability Analysis

### Annex I. Debt Sustainability Analysis

### DSA Summary Assessment
- Overall risk of sovereign stress: Low.
- Near term: Not applicable for disbursing IMF arrangements; in surveillance-only or precautionary arrangements, near-term assessment performed but not published. 1/
- Medium term: Low.
- Long term: Moderate (aging-related expenditures on health and social security feed into debt dynamics).
- Commentary:
  - Finland is at a low overall risk of sovereign stress and debt is sustainable. However, debt is expected to rise steadily for several years.
  - Liquidity risks are low due to a highly diversified investor base and strong institutions.
  - Over the longer run, population aging requires a wide-ranging set of fiscal and structural reforms.
- Debt stabilization in the baseline: No.
- Staff's assessment on the overall risk of sovereign stress: Low, due to low risk of refinancing and diversified investor base.
- Note excerpts:
  - “The risk of sovereign stress is a broader concept than debt sustainability. Unsustainable debt can only be resolved through exceptional measures (such as debt restructuring). In contrast, a sovereign can face stress without its debt necessarily being unsustainable…”
  - Mechanical signal: Deleted before publication in certain cases. 2/

### Debt Coverage and Disclosures (Figure I.2)
- Chosen coverage: CPS (Central government?), GG, NFPS — color code indicates chosen coverage and missing items (visuals not reproduced).
- Question: If central government, are non-central government entities insignificant? n.a.
- Subsectors captured in the baseline (inclusion indicated):
  - 1 Budgetary central government: Yes
  - 2 Extra budgetary funds (EBFs): No (Not applicable)
  - 3 Social security funds (SSFs): Yes
  - 4 State governments: Yes
  - 5 Local governments: Yes
  - 6 Public nonfinancial corporations: (inclusion cell present)
  - 7 Central bank: (inclusion cell present)
  - 8 Other public financial corporations: (inclusion cell present)
- Instrument coverage categories listed: Currency & deposits; Loans; Debt securities; Other accounts payable 2/; IPSGSs 3/ (visual inclusion not reproduced).
- Accounting principles:
  - Basis of recording: Non-cash basis 4/ or Cash basis (visual selection not reproduced).
  - Valuation of debt stock: Nominal value 5/, Face value 6/, Market value 7/ (visual selection not reproduced).
- Debt consolidation across sectors: Consolidated / Non-consolidated (visual selection not reproduced).
- Reporting on intra-government debt holdings (table shows zeros across holders and issuers):
  - Total holdings by sector rows all show 0.

### Public Debt Structure Indicators (Figure I.3)
- Notes: Perimeter shown is general government.
- Debt by Currency (Percent of GDP): Projection series (visual not reproduced).
- Public Debt by Holder (Percent of GDP): External private creditors; External official creditors; Domestic other creditors; Domestic commercial banks (visual not reproduced).
- Public Debt by Governing Law, 2024 (percent): Domestic law; Foreign law ex. multilateral; Multilateral (visual not reproduced).
- Debt by Instruments (Percent of GDP): Marketable debt; Nonmarketable debt (visual not reproduced).
- Public Debt by Maturity (Percent of GDP):
  - Residual maturity: 6. years (label shown: “Residual maturity: 6. years”).
  - Maturity buckets referenced: ≤ 1 year; 1-5 years; > 5 years (visual not reproduced).

### Baseline Scenario (Figure I.4)
- Public debt (Percent of GDP), actual and projections:
  - 2024: 82.1
  - 2025: 88.3
  - 2026: 90.3
  - 2027: 90.8
  - 2028: 92.6
  - 2029: 94.2
  - 2030: 95.5
  - 2031: 98.7
  - 2032: 101.2
  - 2033: 103.6
  - 2034: 105.9
- Change in public debt (Percent of GDP):
  - 2025: 6.2
  - 2026: 2.0
  - 2027: 0.5
  - 2028: 1.8
  - 2029: 1.5
  - 2030: 1.4
  - 2031: 3.2
  - 2032: 2.4
  - 2033: 2.4
  - 2034: 2.3
- Contribution of identified flows (Percent of GDP):
  - 2025: 5.3
  - 2026: 1.5
  - 2027: 1.0
  - 2028: 1.7
  - 2029: 2.2
  - 2030: 2.4
  - 2031: 2.5
  - 2032: 2.4
  - 2033: 2.4
  - 2034: 2.3
- Primary deficit (Percent of GDP):
  - 2024: 4.4
  - 2025: 4.0
  - 2026: 2.9
  - 2027: 2.3
  - 2028: 2.2
  - 2029: 2.5
  - 2030: 2.5
  - 2031: 2.5
  - 2032: 2.5
  - 2033: 2.5
  - 2034: 2.5
- Noninterest revenues (Percent of GDP):
  - 2024: 51.8
  - 2025: 52.7
  - 2026: 52.9
  - 2027: 52.7
  - 2028: 52.6
  - 2029: 52.5
  - 2030–2034: 52.5 (constant)
- Noninterest expenditures (Percent of GDP):
  - 2024: 56.2
  - 2025: 56.7
  - 2026: 55.9
  - 2027: 55.0
  - 2028: 54.7
  - 2029: 55.0
  - 2030–2034: 55.0 (constant)
- Automatic debt dynamics (Percent of GDP):
  - 2024: 0.7
  - 2025: 0.6
  - 2026: -0.3
  - 2027: -0.2
  - 2028: 0.7
  - 2029: 0.8
  - 2030: 0.9
  - 2031: 1.0
  - 2032: 1.0
  - 2033: 1.0
  - 2034: 0.9
- Real interest rate and relative inflation (Percent):
  - 2024: 1.0
  - 2025: 0.7
  - 2026: 0.9
  - 2027: 1.2
  - 2028: 1.8
  - 2029: 1.9
  - 2030: 2.1
  - 2031: 2.2
  - 2032: 2.2
  - 2033: 2.2
  - 2034: 2.1
- Real interest rate (Percent) mirrors the above (relative inflation row shows 0.00 throughout).
- Real growth rate (Percent):
  - 2024: -0.3
  - 2025: -0.1
  - 2026: -1.3
  - 2027: -1.3
  - 2028: -1.2
  - 2029: -1.1
  - 2030: -1.1
  - 2031: n.a.
  - 2032: -1.1
  - 2033: -1.2
  - 2034: -1.2
- Other identified flows (Percent of GDP): 2024: 1.3; 2025: 0.8; 2026–2034: -1.1 (constant).
- Contingent liabilities: 0.00 across projected years.
- Interest Revenues (minus): -1.5 (2024); -1.2 (2025); -1.1 (2026–2034 constant).
- Other transactions (Percent of GDP): 2024: 2.8; 2025: 2.0; 2026–2034: 0.0.
- Contribution of residual (Percent of GDP): 2024: -1.4; 2025: 0.9; 2026: 0.5; 2027: -0.5; 2028: 0.1; 2029: -0.7; 2030: -1.0; 2031: 0.7; 2032–2034: 0.0.
- Gross financing needs (GFN) (Percent of GDP):
  - 2024: 9.4
  - 2025: 9.4
  - 2026: 17.8
  - 2027: 18.0
  - 2028: 20.5
  - 2029: 23.3
  - 2030: 23.8
  - 2031: 16.5
  - 2032: 19.0
  - 2033: 19.0
  - 2034: 19.4
- Of which: debt service (GFN component, Percent of GDP):
  - 2024: 6.5
  - 2025: 6.6
  - 2026: 15.9
  - 2027: 16.8
  - 2028: 19.4
  - 2029: 21.9
  - 2030: 22.4
  - 2031: 15.1
  - 2032: 17.6
  - 2033: 17.5
  - 2034: 18.0
- Local currency debt service equals the debt service numbers above; foreign currency debt service: 0.00 across years.
- Memo:
  - Real GDP growth (percent): 2024: 0.4; 2025: 0.2; 2026: 1.5; 2027: 1.5; 2028: 1.3; 2029: 1.2; 2030: 1.2; 2031: 1.2; 2032: 1.2; 2033: 1.2; 2034: 1.2
  - Inflation (GDP deflator; percent): 2024: 0.7; 2025: 1.3; 2026: 1.7; 2027: 2.1; 2028: 1.9; 2029: 2.1; 2030: 2.1; 2031: 2.1; 2032: 2.1; 2033: 2.1; 2034: 2.1
  - Nominal GDP growth (percent): 2024: 1.2; 2025: 1.5; 2026: 3.2; 2027: 3.7; 2028: 3.2; 2029: 3.4; 2030: 3.4; 2031: 3.4; 2032: 3.4; 2033: 3.4; 2034: 3.4
  - Effective interest rate (percent): 2024: 2.1; 2025: 2.2; 2026: 2.9; 2027: 3.5; 2028: 4.0; 2029: 4.3; 2030: 4.4; 2031: 4.5; 2032: 4.4; 2033: 4.4; 2034: 4.3
- Commentary: Public debt is expected to continue growing in the medium and long term. This growth is mainly driven by recurrent primary deficits, which more than offset the impact of stable positive growth.
- Gross financing needs and debt service rise substantially through 2029–2030 before moderating in later years.

### Realism of Baseline Assumptions (Figure I.5)
- Commentary: Realism analysis does not point to major concerns as the projected fiscal adjustment and debt reduction are well within norms.
- Forecast track record and comparator: Advanced Economies, Non-Commodity Exporter, Surveillance.
- 3-Year debt reduction distribution:
  - 3-year reduction above 75th percentile: 5.9 ppts of GDP (max. 3-year reduction)
  - Percentile rank: 23.6
- 3-Year adjustment in cyclically-adjusted primary balance:
  - 3-year adjustment above 75th percentile: 2 ppts of GDP
  - Percentile rank: 71
- Fiscal Adjustment and Possible Growth Paths:
  - Displayed scenarios include Baseline, Multiplier=0.5, Multiplier=1 (visuals not reproduced).
- Past 5 years vs Next 5 years contribution to change in public sector debt:
  - Past 5 years: chart shows component bars for Primary deficit, Real interest rate and relative inflation, Real GDP growth, Exchange rate depreciation, Residual (visual not reproduced).
  - Next 5 years: chart similarly displayed (visual not reproduced).
- Bond Issuances (Bars, debt issuances %GDP; lines, avg marginal interest rates percent) — visual elements not reproduced.
- Laubach (2009) rule referenced: “assumes bond spreads increase by about 4 bps in response to a 1 ppt increase in the projected debt-to-GDP ratio.” 4/

### Medium-Term Risk Assessment (Figure I.6)
- Debt fanchart module:
  - Debt fanchart width (percent of GDP): 33.4
  - Contribution 1/: 0.5
  - Probability of debt non-stabilization (percent): 6.1
  - Contribution 1/: 0.1
  - Terminal debt-to-GDP x institutions index: 9.3
  - Contribution 1/: 0.2
  - Debt fanchart index (DFI): 0.7
  - Risk signal: Low (signal low if DFI < 1.13; moderate otherwise; high if > 2.08) 3/
- Gross financing needs (GFN) module:
  - Average baseline GFN (percent of GDP): 18.8
  - Contribution 1/: 6.4
  - Initial Banks' claims on the general government (pct bank assets): 3.8
  - Contribution 1/: 1.2
  - Change in banks' claims in stress (pct bank assets): 1.5
  - Contribution 1/: 0.5
  - GFN financeability index (GFI): 8.2
  - Risk signal: Moderate (signal low if GFI < 7.6; high if > 17.9) 4/
- Medium-term Index:
  - Debt fanchart index: 0.7 (value, normalized; contribution shown)
  - GFN financeability index: 8.2
  - Medium-term index value: 0.2 (normalized)
  - Final assessment: Low (Medium-term index signal: Low)
- Final probabilistic performance metrics:
  - Prob. of missed crisis, 2025-2030, if stress not predicted: 0.0 pct.
  - Prob. of false alarms, 2025-2030, if stress predicted: 64.8 pct.
- Commentary: Medium-term analysis points to a low risk in both modules.
- Triggered stress tests: Visuals indicate stress tests not activated in gray; financing provided by banks and stress scenario charts displayed (visuals not reproduced).
- Medium-term index trend: Low risk across 2020–2030 (visual not reproduced).
- Source: IMF staff estimates and projections.

*Source: IMF staff calculations and estimates as presented in Annex I. Debt Sustainability Analysis.*

### Annex III. Risk Assessment Matrix

### Annex III. Risk Assessment Matrix

### Global risks (High likelihood)
- Geopolitical tensions
  - Impact if realized: High
  - Key effects: Commodity price volatility, increased migration pressures, reignited inflation, weaker confidence, investment, tourism, trade, and supply chains; higher energy and food prices eroding real incomes and weakening demand; deterioration in fiscal stance via automatic stabilizers.
  - Policy response:
    - Strengthen energy security and diversify supply chains to cushion price shocks.
    - Provide targeted fiscal support to protect vulnerable groups.
    - Allow automatic stabilizers to work while continuing gradual structural adjustment.
    - Safeguard trade, investment, and financial stability.

- Financial market volatility and correction
  - Likelihood: High
  - Impact if realized: Medium
  - Key effects: Corrections, exchange rate turbulence, spikes in bond yields, capital flow volatility; higher financing costs, weakened bank and corporate balance sheets, depressed investment and consumption; amplification via banks’ reliance on short-term wholesale funding and propagation through NBFIs and crypto markets.
  - Policy response:
    - Maintain strong macroprudential oversight of banks and NBFIs, including stress tests and close monitoring of leverage and liquidity risks.
    - Advance regulation of crypto markets in line with EU frameworks.
    - Ensure contingency plans are ready to safeguard stability.

- Commodity price volatility
  - Likelihood: High
  - Impact if realized: Medium
  - Key effects: Rising energy prices and resurgence in inflation; erosion of household disposable income. Finland’s strong energy production base provides mitigation.
  - Policy response:
    - Allow automatic stabilizers to work but continue a gradual structural adjustment.

- Fiscal vulnerabilities and higher long-term interest rates
  - Likelihood: High
  - Impact if realized: High
  - Key effects: Higher borrowing costs weakening public finances, raising debt-servicing burdens, crowding out priority spending; sovereign stress spilling over to banks and corporates, depressing investment and growth, increasing capital outflow pressures.
  - Policy response:
    - Maintain a credible medium-term fiscal framework.
    - Advance measures to stabilize debt dynamics, including growth-friendly consolidation.
    - Strengthen sovereign debt management and mitigate refinancing risks.

- Escalating trade measures and prolonged uncertainty
  - Likelihood: High
  - Impact if realized: High
  - Key effects: Reduced trade, investment, and growth; potential re-emergence of inflationary pressures; depressed exports and investment, lower productivity, worsened competitiveness; supply chain bottlenecks amplifying inflation and real-income losses.
  - Policy response:
    - Diversify export markets and strengthen collaboration with international partners.
    - Support firms in adjusting supply chains.
    - Maintain credible fiscal and monetary policies to anchor expectations and contain inflationary pressures.

- Cyberthreats
  - Likelihood: High
  - Impact if realized: Medium
  - Key effects: Cyberattacks or technical failures could trigger financial and economic instability (e.g., payments outages, major data breaches), temporarily suppress private consumption, disrupt trade, impair banks, weaken confidence, and cause financial volatility.
  - Policy response:
    - Raise public awareness through targeted preparedness campaigns.
    - Strengthen investments in cyber defense to ensure rapid restoration of critical infrastructure.
    - Conduct cyber stress tests to bolster resilience.

### Regional and domestic risks (Medium or High likelihood)
- Prolonged housing market weakness
  - Likelihood: Medium
  - Impact if realized: High
  - Key effects: Weakened construction, depressed household wealth and consumption, worsened bank asset quality; spillovers from trading partners’ property markets could amplify strains and delay growth recovery.
  - Policy response:
    - Strengthen bank capital and liquidity buffers and closely monitor housing-related credit risks.
    - Implement regular Nordic-wide financial stress tests.
    - Introduce a positive neutral CCyB and maintain existing borrower-based measures.

- Persistently high unemployment
  - Likelihood: Medium
  - Impact if realized: High
  - Key effects: Weaker household incomes and consumption, reduced growth, eroded fiscal sustainability via higher social spending and reduced revenues, increased bank credit risks through weaker household balance sheets.
  - Policy response:
    - Advance labor-market reforms to improve incentives and reduce mismatches.
    - Strengthen active labor-market policies and training programs.
    - Preserve financial stability by monitoring household credit risks and ensuring adequate bank buffers.

- Social discontent
  - Likelihood: Medium
  - Impact if realized: Medium
  - Key effects: Eroded consumer and investor confidence, reduced labor market participation, increased precautionary savings, weakened private demand; political polarization may stall structural reforms and delay fiscal consolidation.
  - Policy response:
    - Provide targeted support to vulnerable groups to mitigate pressures from high living costs while maintaining a credible medium-term fiscal path.

### Footnote on likelihood assessment
- The staff’s subjective assessment of relative likelihoods: "low" indicates a probability below 10 percent; "medium" a probability between 10 and 30 percent; and "high" a probability between 30 and 50 percent.
- The RAM reflects staff views as of the time of discussions with the authorities; risks may interact and materialize jointly. Conjunctural shocks and scenarios are focused on a shorter horizon (between 12 to 18 months); structural risks remain salient over a longer horizon.

*Annex III. Risk Assessment Matrix — IMF staff compilation*

### Annex VI. FSAP 2023 Key Recommendations

### Annex VI. FSAP 2023 Key Recommendations

### Oversight—Cross Cutting
- Recommendation 1: Strengthen the legal and operational framework for legal protection of officials, staff, and agents of all financial oversight agencies.
  - Authorities’ Actions: Not Implemented. The Ministry of Finance does not foresee or deem any legislative changes necessary pertaining to this measure.
  - Timing: NT
- Recommendation 2: Secure FIN-FSA's independence by ensuring that: (i) future Board members have diverse background and experience in FIN-FSA’s purview; (ii) they are not officials of Ministries; and (iii) a statement of the reasons for the dismissal of Director General and eligibility criteria for Director General is clearly in the law and publicly disclosed if a dismissal should ever take place.
  - Authorities’ Actions: Not Implemented, but Initiated. A review of the national provisions regarding the FIN FSA’s independence is ongoing as part of the CRD VI implementation. Possible legislative changes are expected by June 2026.
  - Timing: NT
- Recommendation 3: Increase the resources available to the FIN-FSA, FFSA and other financial oversight agencies so that they are commensurate with their responsibilities and allow them to cover both traditional and emerging risks like ICT, cyber, and climate.
  - Authorities’ Actions: Implemented. In contrast to the consolidation measures envisaged for the ministries, the budget and administrative fees of Financial Stability Authority (FFSA) have grown. The amended Supervision Fees Act came into force in January 2024, increasing supervision fees for the FIN-FSA.
  - Timing: NT

### Macroprudential Policy
- Recommendation 4: Consider providing the FIN-FSA Board with hard powers to issue regulations on macroprudential policy, including the adoption of new instruments; and/or semi-hard powers to issue recommendations on a comply or explain basis.
  - Authorities’ Actions: Not Implemented. The Ministry of Finance does not foresee or deem any legislative changes necessary pertaining to this measure.
  - Timing: MT
- Recommendation 5: Add DTI and DSTI limits to the macroprudential policy toolkit; and introduce a positive rate of CCyB in the neutral stance.
  - Authorities’ Actions: Not Implemented. No changes are expected before European Commission’s legislative proposal on macroprudential policy. The authorities are exploring alternative approaches to enable an earlier activation of the CCyB within the existing regulatory framework.
  - Timing: MT
- Recommendation 6: Enhance systemic risk monitoring by strengthening disaggregated data analysis, corporate sector vulnerability analysis and addressing existing data gaps.
  - Authorities’ Actions: Partially Implemented. The first stage of the positive credit registry is functional, and data quality checks are being performed by the authorities. Micro-level data analyses are being produced more regularly for corporates and households. Further data will be collected (e.g. on consumer credit, housing companies) to address remaining data gaps.
  - Timing: MT

### Systemic Risk Assessment
- Recommendation 7: Enhance liquidity buffers to cover a predetermined threshold of wholesale funding outflows over a five-day horizon.
  - Authorities’ Actions: Not Implemented. The authorities agreed with staff's evaluation of risks stemming from the banking sector's high reliance on short-term wholesale funding.
  - Timing: NT
- Recommendation 8: Lead an effort to conduct a Nordic-wide stress test coordinated exercise, considering interlinkages and spillovers, as well as liquidity-solvency interactions, and expanding the coverage to both banks and non-banking financial institutions.
  - Authorities’ Actions: Partially Implemented. The first stage has been initiated. The Nordic-Baltic authorities have conducted analysis on cross-border bank linkages and shared stress tests methodologies. The second stage, i.e. actual stress testing, will be conducted in 2026.
  - Timing: NT

### Banking Regulation and Supervision
- Recommendation 9: Conduct further analysis on banks’ IFRS-9 implementation, more specifically regarding staging of exposures and functioning of ECL models.
  - Authorities’ Actions: Implemented. Thematic analysis on IFRS9 staging and expected credit loss (ECL) was carried out and published in October 2024.
  - Timing: NT
- Recommendation 10: Include rules on the appointment of a sufficient number of independent directors (supervisory board members) and independency criteria in the legislation.
  - Authorities’ Actions: Partially Implemented. A discussion paper on the assessment and improvement of the existing legislation was published by MoF in Spring 2024. Possible legislative changes are expected to enter into force in 2027.
  - Timing: NT

### Nonbank Financial Institutions
- Recommendation 11: Amend PIC solvency regulations to remove remaining procyclical impacts and the short-term focus despite 2017 reforms and ensure that long-run performance to the benefit of all social partners drives the detailed regulations.
  - Authorities’ Actions: Not Implemented, but Initiated. The government approved early 2025 a new pension reform, which will strengthen private pension financing by increasing the allowed equity weight in investment portfolios. The reform will also reduce the solvency limit, which will reduce procyclicality. Legislative changes are expected in 2026, and the reform could take effect in 2027.
  - Timing: NT
- Recommendation 12: Enhance the public disclosure of analysis and assessment of macroprudential risks in the NBFI sector.
  - Authorities’ Actions: Implemented. The authorities promote risk analysis related to NBFIs and include an assessment of the sector in their annual financial stability report.
  - Timing: NT

### Crisis Management
- Recommendation 13: Publish a policy on bail-in and transfer mechanics that addresses policy choices on valuation, issuance of new instruments and change in control requirements.
  - Authorities’ Actions: Partially Implemented. FFSA has published a high-level document of the bail-in mechanic end-December 2023.
  - Timing: NT
- Recommendation 14: Ensure that emergency liquidity assistance processes, procedures and operational capabilities are sufficient to support a rapid provision of temporary collateralized liquidity for FIs in resolution, tested internally and with external counterparties annually.
  - Authorities’ Actions: Not Implemented. The authorities promote the implementation of this recommendation at the EU level, which has not progressed so far. The first stage of the Nordic-Baltic stress test provided insights for enhancing processes.
  - Timing: NT, C
- Recommendation 15: Centralize cross-authority crisis coordination in the new Crisis Management Coordination Group and ensure its responsibilities include both preparation for, as well as management of, future crises.
  - Authorities’ Actions: Implemented. To the extent permitted by law, common crisis management tasks, responsibilities and planning were centralized in 2023.
  - Timing: I, C

### Financial Integrity
- Recommendation 16: Enhance AML/CFT supervision by improving the risk-based approach and tools for AML/CFT sectoral and institutional risk assessments, with a focus on risks from cross-border and non-resident transactions.
  - Authorities’ Actions: Partially Implemented. Authorities have made progress in strengthening the AML/CFT framework to mitigate risks posed by cross-border and non-resident activity, but more needs to be done in light of the recent regional Nordic-Baltic technical assistance project.
  - Timing: I

*Timing legend provided in source: C = Continuous; I = Immediate (within one year); NT = Near Term (within 1–3 years); MT = Medium Term (within 3–5 years).*

_Annex VI. FSAP 2023 Key Recommendations — Source PDF content provided in the unit_

### Annex VIII. Data Issues

### Annex VIII. Data Issues

### Overall assessment
- Data Adequacy Assessment Rating: A
- Median Rating across sectors: A

### Sectoral ratings (questionnaire results)
- National Accounts: A
- Prices: A
- Government Finance Statistics: A
- External Sector Statistics: A (overall in heatmap), but see consistency below
- Monetary and Financial Statistics: A
- Inter-sectoral Consistency: A
- Detailed questionnaire median: A A A A A A A

### Data quality characteristics (detailed questionnaire)
- Coverage: A A A A A
- Granularity:
  - Government Finance Statistics (operations): A
  - Government Finance Statistics (public debt): A
  - Monetary and Financial Statistics (MFS): A
  - Monetary and Financial Statistics (Financial Soundness Indicators): A
- Consistency: A B A
- Frequency and Timeliness: A A A A A

### Rationale and identified issues
- Overall conclusion: "The data provided to the Fund are adequate for surveillance."
- Noted source agencies: Statistics Finland, Bank of Finland, Ministry of Finance, and other national sources provide data adequate for surveillance.
- Stock-flow adjustments: Relatively large sizes of stock-flow adjustments mainly reflect surpluses in Finland’s pension fund and do not imply statistical shortcomings.
- External Sector consistency: Assessed as "B" due to significant errors and omissions in Balance of Payments estimates, which "average around 2 percent of GDP over the previous decade."
- Changes since last Article IV consultation: "No new data weaknesses have been identified since the last Article IV consultation."

### Corrective actions and capacity development priorities
- Major project: Statistics Finland is designing and building a new IT system for compilation of national accounts and the balance of payments; the new compilation system is scheduled to be operational in 2029.
- Dedicated sub-project:
  - Scheduled from February 1, 2025, to January 31, 2027.
  - Objective: improve the internal consistency of macroeconomic statistics in Finland.
  - Sets technical and organizational requirements for the main project and addresses existing challenges to reduce vertical discrepancies and net errors and omissions in the balance of payments.
  - Follows joint ECB and Eurostat recommendations for reducing vertical discrepancies, including net errors and omissions.
- Interim actions in 2025:
  - Tasks related to reducing vertical discrepancies and net errors and omissions will be carried out within the current system.
  - Particular attention to ensuring internal consistency between national financial accounts and the balance of payments and international investment position.
  - Potential discrepancies and net errors and omissions are continuously monitored as part of the compilation process.
  - Working and compilation methods adjusted to better align with joint ECB and Eurostat recommendations.

### Use of data and remaining gaps
- Use of alternative estimates: "Staff does not use any data and/or estimates in the staff report in lieu of official statistics."
- Other data gaps: "Not applicable."

### Data standards and dissemination
- Finland adheres to the Special Data Dissemination Standard (SDDS) Plus since June 2018 and publishes the data on its National Summary Data Page.
- The latest SDDS Plus Annual Observance Report is available on the Dissemination Standards Bulletin Board (https://dsbb.imf.org/).

*Annex VIII. Data Issues*

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_Source: https://www.imf.org/-/media/files/publications/cr/2026/english/1finea2026001-source-pdf.pdf_