Methods of forecasting general government debt
Follow-up completed: 13.05.2026The audit found that the process used by the Ministry of Finance’s Economics Department to prepare general government debt forecasts is, as a rule, workable and that the methods used are generally up-to-date and sufficiently accurate. Based on the follow-up, progress had been made in the development priorities highlighted by the NAOF.
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Summary of the follow-up
It was found in the audit that the process used by the Ministry of Finance to forecast general government debt is somewhat risky and that the forecasting methods are in need of updating. The audit found that the description of the methodology used in the debt forecasts is partially outdated and too general in nature.
Based on the follow-up, the Ministry of Finance has improved the forecasting methods in the areas highlighted by the NAOF and expanded and updated the description of the forecasting methodology it has published. The Ministry has also paid attention to the risks of the forecasting process identified in the audit (person-dependency, quality assurance arrangements).
The follow-up has been completed. The report is available in Finnish only.
Recommendations of the National Audit Office
The Economics Department of the Ministry of Finance should update its process for preparing the debt forecast and its forecasting methods related to debt-affecting items.
The Economics Department of the Ministry of Finance should update and expand the methodological description published on the forecast
About the audit
The audit examined whether the forecast by the Economics Department of the Ministry of Finance of the development of government debt in the next few years has been prepared using appropriate methods. In addition to obtaining verifying information, the aim of the audit was to increase information on what government debt is and what factors affect its development.
General government debt has been increasing rapidly. The forecast of the development of government debt is an important estimate in view of fiscal policy as a whole, and it may influence the fiscal policy orientation The audit supplements the National Audit Office’s previous assessments of fiscal forecasts. The audit covers such factors affecting government debt whose forecasts have not been audited previously.
Based on the audit, the process used by the Economics Department for preparing government debt forecasts functions well, and the methods used are, in general, up to date and sufficiently accurate. However, the audit found that the process for preparing the forecasts was partly vulnerable to risks, and the forecasting methods should be updated in some areas. In addition, the National Audit Office recommends that the Ministry of Finance should update and expand the methodological description of its forecast.
It is an established practice to measure government debt using the concept of gross debt. This is a practice that complies with legislation and fiscal rules and will continue to affect the limits on the development of general government debt in Finland. However, the data on gross debt does not take into account the fact that assets partly function as a counterpart of debt. In recent years, the variation in the amount of assets has been high, and the importance of assets has increased. When examining general government debt, it would therefore also be important to examine net debt, which takes the financial assets of both the central government and the local government into account as a debt-reducing item. However, the use of a net debt indicator does not change the overall picture of the development of general government debt.
Attachments
Contact persons
Mika Sainio
Principal Fiscal Policy Auditor
Fiscal policy audit
Peetu Keskinen
Economist
Fiscal policy audit