Public finances and the state budget
Public finances describe how the Finnish state collects revenue and uses public funds. The state budget sets out annual spending priorities and reflects political choices, economic conditions, and long-term responsibilities.
What are public finances?
Public finances include the revenues and expenditures of the state, municipalities, and social security funds. They determine how public services are financed and how resources are distributed.
Sound public finances support economic stability, trust in public institutions, and the sustainability of the welfare state.
The state budget
The state budget is an annual plan that outlines how much the state will collect in revenue and how funds will be spent. It covers areas such as education, healthcare, defence, infrastructure, and social benefits.
The government prepares the budget proposal, but Parliament debates, amends, and ultimately approves it.
Public revenue and expenditure
Most public revenue comes from taxes, including income tax, VAT, and corporate tax. Other sources include fees and dividends from state-owned companies.
Public expenditure focuses on welfare services, transfers to households, and investments in infrastructure and education.
Deficits and public debt
When public spending exceeds revenue, the state runs a budget deficit. Persistent deficits increase public debt, which must be financed through borrowing.
Managing debt responsibly is important to ensure that future generations are not burdened with excessive obligations.
Democratic oversight
Democratic oversight of public finances is exercised by Parliament, which monitors government spending and budget implementation.
Independent auditing bodies review the use of public funds, ensuring transparency and accountability.