Finland’s smallest mainland municipality faces financial ruin | Yle News

A small town that once made headlines for offering a 10,000 euro baby bonus scheme is now facing spiralling debts.

Lestijärvi in Central Ostrobothnia has a population of just 680 people. Image: Kalle Niskala / Yle

The smallest municipality in mainland Finland, Lestijärvi in Central Ostrobothnia, is facing severe financial difficulties.

Lestijärvi, with a population of just 680 people, has recently been subject to an assessment procedure, as it meets several of the criteria to be considered a ‘municipality in crisis’.

The assessment examines whether the municipality can provide its residents with the services required by law.

Lestijärvi’s financial woes are deep, with the municipality accumulating three years of heavy losses as well as a deficit of 2.7 million euros on its consolidated balance sheet.

In addition, Lestijärvi’s loans amounted to 10.6 million euros last year, which works out to about 15,500 euros per resident — well above the average for Finnish municipalities.

The municipality has previously announced plans to furlough all its staff members over the next three winters as part of a sweeping cost-saving plan.

Lestijärvi, like many rural Finnish municipalities, has experienced decades of depopulation — with detrimental knock-on effects for the local economy.

The town introduced a baby bonus scheme in 2012 — offering couples 10,000 euros to have a baby — after just one child was born in Lestijärvi over the preceding 12 months. The scheme is common among rural municipalities in Finland as a means of encouraging young families to settle in the area.

The four-year project eventually led to 41 babies being born in the town, at a cost of 400,000 euros to the local coffers — leading officials to conclude that the scheme had not been an effective tool for stimulating population growth.

Finland’s smallest municipality is Sottunga in the autonomous Åland Islands, with a population of 115.

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