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Government reaches agreement on seventh supplementary budget proposal for 2020

Government Communications DepartmentMinistry of Finance 23.10.2020 15.30
Press release 675/2020

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. 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, arts and culture, and public transport

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

A total of EUR 111 million is proposed for securing the level of service in public transport as the virus situation becomes more prolonged. This comprises EUR 11 million for purchasing passenger rail services, and EUR 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, EUR 23 million is proposed in compensation for loss of income due to COVID-19, and for securing the continuation of activities. EUR 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 totalling EUR 175.7 million in 2020. EUR 34.2 million of this is for science, EUR 75,2 million for arts promotion, EUR 48.8 million for promoting sport and physical education and EUR 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 EUR 142.5 million. For the Ministry of Agriculture and Forestry and the rest of its administrative branch the corresponding amount is EUR 10.7 million.

Appropriation increases due to COVID-19 

An additional appropriation of EUR 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 EUR 1.5 million is proposed, intended for vaccination planning and provision, and raising the testing capacity, among other things. 

In addition, EUR 13.1 million is proposed 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. 

A number of 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 EUR 10 million is proposed for the police. A further increase of EUR 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 EUR 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 EUR 990,000 is proposed for internal border control associated with combating the pandemic, and for the costs of protective equipment. 

An increase of EUR 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 EUR 350 million in central government transfers for basic public services is proposed. A total of EUR 5 million is proposed for the corresponding costs in the Province of Åland.

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

Other changes included in the seventh supplementary budget proposal for 2020

Based on the Government Programme, an increase of EUR 50 million is proposed in the appropriations for the exclusive ODA budget item administered by the Ministry for Foreign Affairs. Of this increase, EUR 5 million would be allocated to the World Health Organization’s work to tackle the COVID-19 pandemic in developing countries, EUR 24.5 million to humanitarian aid in response to the humanitarian consequences of the pandemic and EUR 18 million to climate financing. EUR 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 EUR 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 EUR 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 EUR 33 million in 2020 to capitalise universities. The capitalisation 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 EUR 7 million and an appropriation of EUR 400 000 are proposed. Budget authority of EUR 4.2 million and an appropriation of EUR 200,000 are proposed for highway design of the E18 between   Raisio and Naantali. EUR 150,000 is proposed for highway design costs for the Parikkala border-crossing station. 

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 EUR 8.9 million. 

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

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

Changes in revenue estimates

The tax revenue estimate is reduced by a total of EUR 68 million on the basis of data on the most recent trends. In the case of miscellaneous revenue, the revenue estimate is reduced by a total of EUR 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 EUR 331 million.

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

The seventh supplementary budget proposal for 2020 will be submitted to Parliament on Thursday 29 October, when it will also be published at budjetti.vm.fi.

Inquiries: Joonas Rahkola, Special Adviser to the Prime Minister in Economic Affairs, tel. +358 295 160 998, Markus Lahtinen, Special Adviser to the Minister of Finance, tel. +358 295 530 417, Henri Purje, Special Adviser to the Minister of Education, tel. +358 295 330 017, Jussi Pyykkönen, Special Adviser to the Minister of the Interior, tel. +358 50 477 8354, and Camilla Mäkinen, Special Adviser to the Minister of Justice, tel. +358 295 150 119