Sustainable Growth Programme’s reforms and investments to start

Finland will begin the first reforms and investments of its Sustainable Growth Programme already this year, but most of the funding will be used in 2022–2023. In its third supplementary budget, the Government proposes investments in research, continuous learning, quicker access to care and reduction of greenhouse gas emissions. The proposal includes EUR 238 million in funding for the Sustainable Growth Programme.

The Government’s Ministerial Committee on Economic Policy supported the adoption of the final Recovery and Resilience Plan on Monday 24 May. The Government is due to adopt the Plan on Thursday 27 May. The Plan forms part of the Sustainable Growth Programme for Finland.

Among other things, the Sustainable Growth Programme will

• reduce emissions by boosting investments and research and development activities
• accelerate sustainable economic growth
• create opportunities for long-term economic growth
• speed up access to care
• support reforms that promote employment

Half of the funding involved will be for promoting a green transition, and about a quarter will be for digitalisation. The Programme includes approximately EUR 700 million in funding for research, development and innovation (RDI) activities.

“The Recovery and Resilience Plans of the Member States support recovery and aim to change the economic structures, so they can permanently improve economic growth in the EU. Finland’s Plan forms a part of this bigger European package. The Plan is a balanced combination of reforms and investments that support sustainable economic growth and repair the damage caused by the coronavirus pandemic,” says Minister of Finance Matti Vanhanen, chair of the ministerial working group on sustainable growth.

The ministerial working group on sustainable growth for Finland has focused on strong public-private partnerships in order to leverage investment. The aim of the Programme is to reduce carbon dioxide emissions in Finland in a fair and just way, but also to open new markets for Finnish companies and to gain a position at the leading edge internationally. Finnish companies can also apply for funding from recovery projects in other countries.

The European Commission predicts that investments in the EU will rise to a record high next year. According to the Commission’s Spring 2021 Economic Forecast, the Recovery and Resilience Facility (RRF) will increase the EU’s GDP by around 1.2% by the end of 2022 compared with 2019.

The Ministry of Finance estimates that, due to the Sustainable Growth Programme, Finland’s GDP could be 0.3% higher in 2026 than without the Programme. In the long term, the Programme’s reforms and investments could raise GDP by up to 0.8%. There is considerable uncertainty about the long-term impacts.

Content of the Plan largely unchanged

Finland submitted its preliminary Recovery and Resilience Plan to the European Commission on 15 March. Subsequently, the ministries continued discussions with the Commission and finalised the Plan based on these discussions. No significant changes to the content of the Plan were made during further preparation.

The Recovery and Resilience Plan outlines the use of RRF funding in Finland. According to EU legislation, the total amount of funding for 2021–2023 is approximately EUR 2.1 billion at current prices (EUR 1.9 billion at 2018 prices). The final amount of funding for Finland from the RRF will not be known until summer 2022, as the performance of the economy in 2021 and 2022 will affect the figures. 

Finland will also receive funding for other programmes under the EU’s recovery package, such as those under the Just Transition Mechanism and the European Agricultural Fund for Rural Development. The ministerial working group on sustainable growth will adapt the content of these programmes to the Plan that will be adopted now. The overall amount of EU funding for Finland will be approximately EUR 2.9 billion at current prices (EUR 2.7 billion at 2018 prices).

Funding for research and emissions reduction begins

On Thursday 27 May, the Government will submit to Parliament a proposal for the third supplementary budget for the year, which will begin the implementation of Finland’s Sustainable Growth Programme. 

The funding of the third draft supplementary budget will be divided according to the four pillars in the Programme as follows:

1. green transition, EUR 48.5 million 
2. digitalisation, EUR 9.5 million
3. employment and skills, EUR 134.9 million
4. health and social services, EUR 45 million.

The Government proposes appropriations for RDI activities from pillar 3. According to the proposal, the Academy of Finland will receive EUR 45 million in appropriations while Business Finland will receive EUR 62 million in authorisations for grants. The supplementary budget will also initiate reforms to promote continuous learning.

As part of the green transition, funding would be available for phasing out oil heating in single-family houses and for building charging infrastructure for electric cars. Greenhouse gas emissions will also be reduced by investments in the reuse and recycling of industrial sidestreams. 

Investments in social and health care services will be allocated to the relief of the service and care debt and to digital services that support treatment guarantees.  

Meanwhile, investments in digitalisation will focus on prevention of money laundering, development of a digital economy for businesses, development of a housing information system, digitalisation of rail transport and cybersecurity.

A list of expenditures in the supplementary budget that relate to the implementation of the Sustainable Growth Programme is attached to this press release.  

The ministries and organisations under their purview will organise a call for applications for funding for measures now launched in their own administrative branches and will inform about these calls separately.

Achieving objectives is a condition of funding

The measures included in the supplementary budget will come from the EU as an advance payment once the Union has approved Finland’s Recovery and Resilience Plan. The advance payment forms 13% of the whole funding. 

In future, Member States will apply for payments from the EU twice a year on the basis of how the targets and milestones have been achieved. Each Member State will report to the European Commission on the achievement of the objectives set out in its plan. Requests for payment will also be discussed among the Member States.

“It is important that the use of RRF funds is closely monitored, as required by EU legislation. In addition to national monitoring and by the Commission, the Member States will also evaluate together how well they have achieved the targets and interim objectives as a condition for funding. The information is open to anyone, which allows citizens to learn about the plans and look at the reports from all countries,” Vanhanen says. 

The use of funding is monitored not only at EU level but also nationally. EU legislation requires each Member State to have reliable solutions for administrative, supervisory and audit activities. The Ministry of Finance is responsible for this in Finland.

What next?

The Ministry of Finance will submit Finland’s Recovery and Resilience Plan to the EU. The European Commission has two months to assess the Member States’ Plans, which will then be approved by the Council of the EU. 

In future, appropriations will be included in the State budgets. Each ministry will communicate separately about the calls for applications for appropriations. 

Inquiries:

Maria Kaisa Aula, State Secretary, tel. +358 50 530 9697, mariakaisa.aula(at)vm.fi
Laura Vartia, Senior Ministerial Adviser, tel. +358 29 5530 228, laura.vartia(at)vm.fi 
Olli Kärkkäinen, Chief Specialist, tel. +358 2955 30545, olli.karkkainen(at)vm.fi