(Bloomberg) -- Finland is turning to former Prime Minister Matti Vanhanen to steer it out of the Covid-19 slump and help rebuild its public finances after a massive bout of stimulus spending.
The Center Party unanimously chose the 64-year-old speaker of parliament as the country's new finance minister after Katri Kulmuni stepped down on Friday over an expenses scandal. Vanhanen told a press conference in Helsinki he had accepted the nomination after some initial reticence.
With the onset of the Covid-19 crisis, Finland, like most other countries, has abandoned all talk of austerity, raising its 2020 borrowing estimate four times in recent months, to 18.8 billion euros ($21.2 billion). That compares with just over 2 billion euros at the start of the year.
This kind of stimulus is especially difficult for the traditionally frugal Center Party, a junior partner in Social Democratic government of Prime Minister Sanna Marin. The Center Party has failed to rebuild its support after a heavy loss in last year's parliamentary election and fears more voters will flee if such spending continues.
Finland should hammer out a road map for the long-term sustainability of its public finances, Vanhanen said, adding that a good credit score helps keep borrowing costs in check. “I don't want to exaggerate the significance of our credit rating, but we have to keep it at the back of our minds.”
Moody's Is More Optimistic Than Finland on Its Debt Forecast
Vanhanen, who steered two coalition governments between 2003 and 2010, is expected to formally assume the post later this week.
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