Huge additional bill for F-35 fighters – No preparation for new risk
The government hedged against exchange rate fluctuations when purchasing fighters, but still huge additional costs are coming. Donald Trump's tariffs also pose a new risk that was not prepared for.
Huge additional bill for F-35 fighters – No preparation for new risk
The government hedged against exchange rate fluctuations when purchasing fighters, but still huge additional costs are coming. Donald Trump's tariffs also pose a new risk that was not prepared for.
F-35 fighters will replace the Air Force's Hornets by the end of 2030. Bo Amstrup
Joakim Kullas
Monday 7 April 2025 at 17:09
The costs of the F-35 fighter jet procurement due to exchange rates are expected to increase by 850 million euros by 2030, says Budget Counsellor Marko Synkkänen from the Ministry of Finance to Iltalehti.
– Yes, the costs will increase from what was previously expected, says Synkkänen.
The reason is the losses due to exchange rate fluctuations. In percentage terms, the costs will increase by approximately 8–9 percent.
– The estimate of exchange rate losses at the end of March compared to the original call for tenders is approximately 850 million euros [by 2030].
In total, the Parliament granted ten billion euros in funding for the fighter jet project in the 2020 and 2021 budgets, excluding index and exchange rate costs. The losses from exchange rate fluctuations will therefore be on top of the total purchase amount.
In 2025, the state budget estimates that the exchange rate losses from fighter procurement will be 150 million euros and the index costs will be 154 million euros. The total costs of the fighter project have been set aside for the current year for just over 1.85 billion euros.
The biggest risk
According to the procurement memorandum dated December 2021, exchange rate fluctuations are the most significant financial risk facing the project.
In December 2021, the Cabinet Committee on Economic Policy made a decision to hedge half of the approximately ten billion euro procurement against exchange rate fluctuations. According to Synkkänen, this was a compromise aimed at reducing the fluctuations related to currency-denominated payments. The arrangement is already exceptional for the state.
– Typically, the state has not previously utilized such an arrangement in its procurements, Synkkänen points out.
Preparing for currency risks has been more typical for companies and it has previously been seen that the state's risk-bearing capacity is greater than that of companies.
So far, the dollar has weakened against other major currencies due to Trump's tariffs.
Donald Trump threatens
Another risk related to fighter jet procurement is Donald Trump's tariffs and the possible counter-tariffs imposed on them. According to Reuters, US Federal Reserve Chairman Jerome Powell has already described the tariffs as higher than expected and warned that Trump's tariffs will accelerate price increases, i.e. inflation.
The tariffs and the resulting inflation could increase the final price of the F-35 fighter jet project.
- It is possible that it [tariffs and inflation] will be reflected in it. I am not going to predict and I have not seen any estimates of what scale it will be. Let's just see what kind of arrangement is reached regarding these tariffs, Synkkänen says.
Synkkänen does not assess whether tariffs or possible inflation pose a greater risk to the increase in the costs of the fighter project.
No preparations were made
However, he admits that the possible costs of tariff risks have not been prepared for.
– In my opinion, there is none when it comes to this aircraft procurement. And I do not recognize any measures that would have been prepared for.
So if tariffs increase prices or inflation increases, the state just has to pump more money into the project?
– That is true.
If the cost development turns out to be higher than expected, according to Synkkänen, it will be directly reflected in the payments arising from the procurement.
– Future governments will also have to assess how it will be coordinated with fiscal policy and other measures.
Valtio suojautui hävittäjiä ostaessaan valuuttakurssien heilahteluun, mutta silti tulossa on huimasti lisää kustannuksia. Donald Trumpin tullit aiheuttavat myös uuden riskin, johon ei osattu varautua.
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