EU urges Finland to cut public debt

(HELSINKI) - The European Commission on Wednesday urged Finland to rein in its public debt amid forecasts that it could rise to 60 percent in the next five years.

"Finland's (public) debt will rise to as much as 55 percent next year and ... in the next five years, which will be in the next term of government, it will rise to around 60 percent," the EU's Economic Affairs Commissioner Olli Rehn told Finnish public broadcaster YLE.

"In the European Union, that's the level at which measures to restrain excess debt and budget deficits will kick in," Rehn, a Finn, added.

EU criteria require member states to keep their public debt within 60 percent of gross domestic product.

Finland is the only eurozone country to hold the top triple-A credit rating with a stable outlook from all three major international credit rating agencies.

Rehn said however that the high level of debt would pose a problem for Finland, because the government would on the one hand have to strengthen exports and competitiveness while at the same time streamline the welfare state in order to avoid rapid over-indebtedness.

"It would be better to act on the principle of ongoing preventive reform and make timely decisions, rather than when one's back is against the wall," Rehn said.

The Finnish government's 2013 budget proposal forecast public debt of 54.9 percent of GDP in 2013, compared to 53 percent in 2012.