HELSINKI, April 23 (Reuters) - Finland will increase defence spending to 3.2% of gross domestic product by 2030, the government said, as it decided to cut other expenditure and drafted its budget for the next four years.
Finland's economy has been ailing since neighbouring Russia started its full-scale invasion of Ukraine in 2022, prompting Helsinki to join the NATO military alliance in 2023 and increase defence spending, which stood at 2.5% of GDP in 2025.
A rise to 3.2% spending on defence by 2030 would bring Finland closer to NATO's target of 3.5% by 2035.
Prime Minister Petteri Orpo said late on Wednesday that the government would direct the increased money in the near term to military recruitment, refresher courses for reservists, drone defence and explosive production.
Orpo's right-wing coalition announced further spending cuts, including healthcare and social services, on top of previous austerity measures with which it has sought but failed to curb a growing public debt ratio projected to breach 90% of GDP in 2026.
Finland had a budget gap equivalent to 4.4% of GDP in 2024 and 4.3% in 2025, which led the EU to start disciplinary steps against it for running an excessive deficit. It gave Helsinki until 2028 to narrow the gap to within EU limits of 3% of GDP.
The government did not immediately publish a fresh estimate of the budget gap for coming years.
The unpopular austerity measures have led to declining support for the government ahead of next year's parliamentary election, with two in three respondents saying the government had performed poorly in a recent survey by pollster Verian.
(Reporting by Anne Kauranen in Helsinki; Editing by Andrew Cawthorne)
