Government submits supplementary budget proposal to Parliament due to the coronavirus
The Government submitted the first supplementary budget proposal for 2020 to Parliament on Friday 20 March. The supplementary budget is intended for covering expenses incurring from the coronavirus as well as for easing the financial situation of companies.
On 16 March 2020, the Government stated, in cooperation with the President of the Republic, that Finland is in a state of emergency owing to the coronavirus outbreak, and on 18 March 2020 Parliament adopted the decrees on the use of the powers granted by the Act. The Government has outlined a number of measures aimed at protecting the population and safeguarding the functioning of society and the economy.
The focus in this supplementary budget proposal is on covering costs deriving from the need to combat the coronavirus outbreak and on preparedness expenses, as well as other essential and urgent budgetary needs that are directly related to the outbreak, such as securing business financing.
In the negotiations on the General Government Fiscal Plan (government session on spending limits) on 7 April and in the subsequent supplementary budget proposals for 2020, the Government will also assess the need for additional appropriations directly caused by the coronavirus and for measures to support the economy more broadly. The Government is monitoring the state of local government finances and, if necessary, will make provision for supporting municipalities in the event of an increase in expenditure caused by the coronavirus outbreak or if tax receipts suddenly diminish.
Administrative branch of the Ministry of Social Affairs and Health
An additional appropriation of EUR 12.8 million is proposed for the operating expenses of the Finnish Institute for Health and Welfare for the expenditure arising from the coronavirus. The additional appropriation is intended for purposes such as disseminating information and raising awareness among citizens, for safeguarding the functioning of information systems and for maintaining laboratory capacity. Altogether EUR 6 million of the additional appropriation will be allocated to a broad-based research consortium for research into the coronavirus epidemic, in particular for developing rapid diagnostic methods and research into the emergence of immunity and for creating a national monitoring system for it. Of the additional funding allocated to research, EUR 4 million will be used to monitor the effectiveness of the measures to curb the spread of the coronavirus.
A total of EUR 5 million is proposed for Finland's participation in the research and development of a COVID-19 vaccine.
An additional EUR 26 million is proposed for the supervision of communicable diseases. The increase will be allocated to the procurement of diagnostic test tools and other medical devices for the hospital districts.
Easing the financial situation of companies
An increase of EUR 150 million is proposed to the budget authority for Business Finland's research, development and innovation activities, which will be used to fix the disturbances in the production chain caused by the coronavirus, to develop creative industries and to support tourism and its ancillary activities.
To support business development projects, a budget authority increase of EUR 50 million is proposed to be used to manage and prevent the effects of the coronavirus on SMEs in service sectors, including other sectors as appropriate.
It is proposed that the operating expenses of the Centres for Economic Development, Transport and the Environment be increased by EUR 0.5 million in order to implement a national operating model for entrepreneurs facing financial and payment difficulties and to strengthen the financial assistance service called Talouapu.
Other changes
It is proposed that additional funds of EUR 5.6 million be allocated to the police to cover extra expenditure arising from the coronavirus outbreak.
Finland has temporarily reintroduced border control at the EU's internal borders from 19 March to 13 April 2020 owing to the coronavirus outbreak. The EU has reintroduced control at the EU's external borders until 30 April 2020. An additional appropriation of EUR 3.0 million is proposed for the Border Guard, following an increase in border control, among other things.
Altogether EUR 200 million is proposed for non-specified expenditure relating to the emergency conditions.
It is proposed that the Government may grant a government guarantee of up to EUR 600 million as collateral for premium lending of Finnair plc earnings-related pensions (employee pensions refinancing) to Ilmarinen Mutual Pension Insurance Company. Finnair Oyj's business is suffering significantly from the global effects of the coronavirus. The continuous fall in demand and the restrictions imposed by the authorities in different countries have led to a significant cut in business.
To reduce the effects of the coronavirus, an increase of EUR 0.9 million is proposed for the operating expenses of the Arts Promotion Centre to be used as grants to individuals and actors in the cultural sector. The increase in the appropriation is based on donations from foundations for art and culture.
The supplementary budget proposal consists of an increase of approximately EUR 398 million in appropriations. The proposal increases the need for net government borrowing slightly less, i.e. EUR 397 million, taking into account the EUR 0.9 million increase in miscellaneous revenue. Government net borrowing is estimated to be approximately EUR 2.6 billion in 2020.
The new macroeconomic forecast of the Economics Department of the Ministry of Finance, which also takes into account the consequences of the coronavirus outbreak, will be published on 16 April 2020.
Markus Lahtinen, Special Adviser to the Minister of Finance (Economic Affairs), tel. +358 2955 30417
Corrention 20.3.2020 at 12:33: 398 million (bolded text).