Government offers extra 1.5 billion to save companies and citizens from Covid-19

The government is proposing that its seventh supplementary budget proposal for 2020 would allocate funds particularly for coronavirus-related needs, covering additional costs and compensating for loss of income and revenue.

According to the Ministry of Finance, managing the coronavirus (COVID-19) crisis is "a central part of the Government’s economic policy," and the Government intends to use the supplementary budget to build a bridge to help businesses, municipalities and citizens over the crisis.

Support for businesses

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

A total of 111 million euros 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 euros 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. Of them, 34.2 million is for science, 75,2 million for arts promotion, 48.8 million for promoting sport and physical education and 17.6 million for 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, influenced by spending limits, is 10.7 million euros.

Purchase of vaccines

An additional appropriation of 90 million is proposed for the acquisition of Covid-19 vaccines. For the operating costs of the Finnish Institute for Health and Welfare a further sum of approximately 1.5 million euros is proposed, intended for vaccination planning and provision, and raising the testing capacity, among other things. 

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

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

10 million for the police

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

For the Border Guard, an appropriation increase of 3.4 million is proposed in order to meet the extra costs arising from the temporary reintroduction of internal border controls. For Customs, a sum of 990,000 euros 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.

Local government compensations

To compensate municipalities for the costs of coronavirus testing and tracing, a one-off increase of 350 million euros in central government transfers for basic public services is proposed. A total of 5 million euros is proposed for the corresponding costs in the province of Åland.

In addition, 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 in order to compensate for other costs arising from Covid-19 and loss of revenue. 

Aid to developing countries

Based on the Government Programme, an increase of 50 million euros is proposed in the appropriations for the exclusive Official Development assistance (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 euros is proposed for increasing the capital of the Finnish Fund for Industrial Cooperation (Finnfund). This also supports the export opportunities of Finnish companies.

Other changes

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

rocurement authority of 240 million euros is proposed for 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. 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 capitalise universities. The capitalisation will be based on the effectiveness of university research.

Impact on government finances

Impact on central government debt and the balance of central government finances

The increase in appropriations in the seventh supplementary budget proposal for 2020 amounts to approximately 1.5 billion euros and the decrease in revenue is approximately 341 million euros.

The need for central government net borrowing would increase by about 1.8 billion euros, bringing the estimate of overall central government net borrowing to approximately 19.6 billion in 2020.

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