The supplementary budget is aimed to build a bridge to help businesses, municipalities and citizens over the crisis.

Minister of Finance Matti Vanhanen (the Centre). Photograph: Tony Öhberg/Finland Today

The government has concluded its negotiations on the seventh supplementary budget proposal for 2020. The proposal aims to cover coronavirus-related needs and additional costs as well as to compensate for the loss of income and revenue.

In a news release, the government noted that “managing the coronavirus crisis is a central part of the government’s economic policy.” The supplementary budget is aimed to build a bridge to help businesses, municipalities and citizens over the crisis.

Here are the highlights of the proposal.

Government debt

The increase in appropriations in the seventh supplementary budget proposal for 2020 amounts to approximately €1.5 billion and the decrease in revenue is approximately €341 million. The need for central government net borrowing would increase by about €1.8 billion, bringing the estimate of overall central government net borrowing to approximately €19.6 billion in 2020.

Businesses, culture and public transport

An additional appropriation of €410 million is proposed for introducing a second application round for the government’s fixed-term support for business costs. Appropriations of €140 million were still unused after the first round of applications, and so the total amount now available for this purpose would be €550 million.

A total of €111 million is proposed for securing the level of service in public transport as the virus situation becomes more prolonged. This comprises €11 million for purchasing passenger rail services, and €100 million for purchases of public transport services in cities and mid-sized urban areas, covering both local and regional services.

In the arts and culture sector, €23 million is proposed in compensation for loss of income due to Covid-19, and for securing the continuation of activities.

€7 million is proposed for the Arts Promotion Centre, to be distributed as grants to individuals and others in the arts and culture sector.

To offset the drop in revenue from the proceeds of gambling services, the Ministry of Education and Culture and the agencies and bodies within its administrative branch will receive budget funds totaling €175.7 million in 2020.

€34.2 million of this is for science, €75,2 million for art promotion, €48.8 million for promoting sport and physical education and €17.6 million for a youth work promotion.

For the Ministry of Social Affairs and Health and the rest of its administrative branch, the total amount for offsetting the situation in 2020 is €142.5 million. For the Ministry of Agriculture and Forestry and the rest of its administrative branch, the corresponding amount is €10.7 million.

Appropriation increases due to Covid-19

More money is allocated to purchase Covid-19 vaccines when available. A sum of €90 million is proposed. In addition, the government proposes an additional €1.5 billion for the operating costs of the Finnish Institute for Health and Welfare. The sum is intended to, for example, support vaccination planning and raising the testing capacity.

In addition, €13.1 million is reserved for Finland’s contribution towards the Covid-19 vaccines to be purchased with European Commission finance as well as the costs of reserving vaccines in advance.

Several increases are also proposed in the appropriations for government agencies and public bodies as a consequence of Covid-19. 

Due to a reduction in the proceeds from chargeable services provided by the police, especially passport services, an increased allocation of €10 million is proposed for the police. A further increase of €3 million for the police in the current year is intended for covering additional expenditures arising from the virus situation.

For the Border Guard, an appropriation increase of €3.4 million is proposed to meet the extra costs arising from the temporary reintroduction of internal border controls. For Customs, a sum of €990,000 is proposed for internal border control associated with combating the pandemic, and for the costs of protective equipment.

An increase of €7.1 million is proposed for covering expenditure on the food allowance for conscripts due to the exceptional arrangements.

Support for local government finances

By supporting local government finances, the government is safeguarding the funding for basic public services and curbing the pressure for tax increases. To compensate municipalities for the costs of coronavirus testing and tracing, a one-off increase of €350 million in central government transfers for basic public services is proposed. A total of €5 million is proposed for the corresponding costs in the Province of Åland.

Also, one-off increases of €400 million in central government transfers to local government for basic public services and €200 million for hospital districts are proposed to compensate for other costs arising from Covid-19 and loss of revenue.

Other changes

Based on the government program, an increase of €50 million is proposed in the appropriations for the exclusive ODA budget item administered by the Ministry for Foreign Affairs. Of this increase, €5 million would be allocated to the World Health Organization’s work to tackle the Covid-19 pandemic in developing countries, €24.5 million to humanitarian aid in response to the humanitarian consequences of the pandemic and €18 million to climate financing. €50 million is proposed for increasing the capital of the Finnish Fund for Industrial Cooperation (Finnfund). This also supports the export opportunities of Finnish companies.

 Procurement authority of €240 million is proposed for the Border Guard, entitling the Border Guard to conclude contracts for the acquisition of two new offshore patrol vessels. An appropriation of €120 million is proposed for the current year. The procurement of the offshore patrol vessels will have a significant effect on domestic employment.

Based on a contribution from the Finnish Innovation Fund Sitra, the state will use € 33 million in 2020 to capitalize universities. The capitalization will be based on the effectiveness of university research.

The supplementary budget proposal also includes appropriations for transport projects. The improvement of Highway 5 between Hurus and Hietanen is a new road scheme, for which budget authority of €7 million and an appropriation of €400,000 are proposed. The budget authority of €4.2 million and an appropriation of €200,000 are proposed for the highway design of the E18 between Raisio and Naantali. €150,000 is proposed for highway design costs for the Parikkala border-crossing station.

The continuation of temporary changes in unemployment security between November 1 and December 31 and the temporary reduction in the entrepreneurs’ unemployment fund self-financing contribution will increase costs by a total of €8.9 million.

An appropriation of €300 million is proposed for the capitalization of Ilmastorahasto Oy (Climate Fund). The purpose of the fund is to provide funding for projects focusing on combating climate change, promoting digitalization and boosting low-carbon approaches in the industry.

A total increase of €16.1 million is proposed in the appropriations for nature conservation based on the government program. The appropriations would be used for, for example, the needs of the Metso program, a goose field project and additional compensation for damage caused by protected species.

Tax revenue decreases

The tax revenue estimate is reduced by a total of €68 million based on data on the most recent trends. In the case of miscellaneous revenue, the revenue estimate is reduced by a total of €273 million. The most significant single explanation for this is the substantial reduction Veikkaus’s proceeds from gambling activities. This is due to measures taken to reduce gambling-related harm, the effects of the Covid-19 pandemic and the reduction in the company’s market share resulting from tougher competition. As a result, gambling revenue in the Budget will be distinctly lower than had previously been anticipated, reducing miscellaneous revenue by €331 million.

The seventh supplementary budget proposal for 2020 will be submitted to Parliament on Thursday, October 29.