The agreed ECU central rate of the markka appears to provide adequate preconditions for competitiveness and to help, at the same time, to contain inflationary pressures. Exposure to shocks originating in other countries may even increase. As a participant in the ERM, Finland also participates in the mutual intervention arrangements between central banks. Successful participation in the ERM is conditional to the maintenance of macroeconomic balance and to confidence in the ability of economic policy to achieve its goals. The role of fiscal policy and moderate cost developments will, however, be emphasized in the new circumstances.
Fiscal policy is now on the right track, and the fiscal deficit is declining.
The Government made in its recently updated convergence program a commitment to implement measures, as needed, to achieve the strengthening of the fiscal balance targeted in the program.