HELSINKI, Aug. 8 (Xinhua) -- The Finnish Ministry of Finance on Friday unveiled its draft budget for 2026, proposing sweeping spending cuts aimed at curbing rising debt, even as the government faces a projected deficit of 9.9 billion euros (11.55 billion U.S. dollars).
Total government expenditure is expected to reach 89.6 billion euros in 2026, which is 0.5 billion euros less than the total budgeted for 2025, including the second supplementary budget, the ministry said in a press release. The draft budget is designed to slow the growth of general government indebtedness.
The draft includes approximately 1 billion euros in new adjustment measures put forward by Minister of Finance Riikka Purra earlier this week. Among the most significant cost-saving actions are deep cuts to education, foreign aid, refugee resettlement, and cultural funding.
University funding will be reduced by 59 million euros next year and by 112 million euros in 2027. The Finnish National Agency for Education will be dissolved in 2027, with its functions transferred to the Ministry of Education and Culture, generating estimated savings of 15 million euros.
Funding for official development assistance (ODA), administered by the Ministry for Foreign Affairs, is set to be reduced by 65 million euros in 2026. The cuts include reductions in direct aid and development loans, along with the reversal of a planned 10-million-euro increase in humanitarian relief funding.
Meanwhile, the payment of imputed central government transfers to municipalities and wellbeing services counties for the integration of immigrants will be discontinued, saving an estimated 167 million euros in 2026. In addition, Finland will cease accepting resettled refugees, a measure expected to yield savings of about 6 million euros next year.
Support for civic organizations and cultural initiatives will also be scaled back. In 2026, subsidies for associations and foundations promoting health and social wellbeing will be cut by 100 million euros, while funding for arts promotion and the construction of sports facilities will be reduced by 35 million euros.
Without the proposed adjustment measures, the Ministry warned, Finland's general government debt ratio could surpass 90 percent of gross domestic product (GDP) by 2029. It cited a difficult economic outlook and rising interest costs as key contributors to the country's mounting debt burden.
Despite the overall spending cuts, the government plans a significant boost in defense funding. The draft budget includes procurement authorities of 3 billion euros for defense material, a sixfold increase from the 0.5 billion euros authorized in the 2025 budget.
In spring 2025, the government decided to raise Finland's defense investment to 3 percent of GDP by 2029. The country is also committed to further increasing its defense spending to 3.5 percent of GDP by 2035, in line with targets agreed by the North Atlantic Treaty Organization (NATO), the press release noted.
The government is scheduled to review the draft budget in a session in early September. The Ministry of Finance will then finalize the proposal, which is set to be submitted to the Finnish parliament on Sept. 22 and approved in December. (1 euro = 1.17 U.S. dollar) ■
