LONDON

Finland is likely to be placed under the Excessive Debt Procedure, the country's finance minister warned, citing structural problems, revenue development, and deeper structural problems in the nation’s economy.

Speaking to lawmakers in parliament, Riikka Purra mentioned the European Commission's economic forecast, suggesting that Finland's state debt would exceed a cap of 90% of GDP as early as 2026, Finnish broadcaster Yle reported.

"Finland will be subject to the Excessive Debt Procedure from the beginning of the year," Purra told Tuesday, adding this seems "very clear, based on the figures."

According to the commission forecast, Finland's public debt is projected to rise to 92.3% of GDP by 2027.

On Monday, the commission said Finland's economy is stagnating as the country could rank as the sixth most indebted country in the EU by 2027.

The finance minister noted that when public debt breaches the 90% threshold, the EU will require the next government to address the issue and lower its debt ratio by at least 1% annually.

The mechanism also requires Finland to issue reports about its public finances and its progress in the matter more frequently than it currently does.

Purra said that weak revenue development is to blame, while mentioning that the Nordic country's economic problems are "structural."

"Defense spending does not explain our current deficit, but rather the weak development of revenue in relation to other growing expenditures, like rapidly growing social welfare expenditures and (benefit) transfer payments," she added.

If it does become subject to the procedure, Finland would need to issue reports about its public finances and its progress in the matter more frequently than it currently does.

If a member state fails to comply, it can be subject to sanctions, but the threshold for that is very high, according to the report.