Russian invasion of Ukraine

The Ministry for Foreign Affairs is responsible for the implementation of economic sanctions and for communications relating to them. A great deal of information on sanctions is available on the website of the Ministry for Foreign Affairs. Within the Ministry of Finance’s branch of government, Finnish Customs is responsible for the supervision of export sanctions. 

For the time being, the Ministry of Finance’s role in sanctions matters is to estimate the economic impact of sanctions and to assess various measures.

Ministry for Foreign Affairs sanctions website
Finnish Customs Ukraine website
Bank of Finland Ukraine website (in Finnish)

Sanctions and public procurement

The Ministry of Finance recommends that future invitations to tender put out by government agencies and public bodies include an affirmation from suppliers that they or their owners are not subject to sanctions. The Ministry of Finance also recommends that sanctions clauses be added to the contractual terms and conditions used in connection with invitations to tender. The Ministry has amended the General Terms of Public Procurement so that procurement contracts can be terminated immediately if a company is targeted by sanctions.

The Ministry of Finance is continuously monitoring the effects of the war in Ukraine on central government procurement.

Frequently asked questions on public procurement sanctions against Russia on European Comission's website

Questions and answers on public procrument sanctions against Russia

The stability of the financial system and the continuity of financial market services that are essential for the functioning of society are safeguarded in all circumstances through effective supervision and regulation and by maintaining crisis management preparedness. Finland has a national operating model and backup systems to safeguard the continuity of essential financial market services in case of incidents and emergencies.

The regulation of financial markets is extensively harmonised within the EU, and most national legislation is based on EU directives or regulations. A key consideration in the Ministry of Finance’s activities is to proactively influence the preparation of regulations concerning financial markets in the EU.

Finland is part of the EU banking union, in which the authority for supervising the solvency of credit institutions and for the management of economic crises has been transferred to the EU's Single Supervisory Mechanism and Single Resolution Mechanism. The Financial Supervisory Authority and the Financial Stability Authority, which operate under the Ministry of Finance, function as part of these mechanisms in Finland.

The Ministry is responsible for the regulation of financial markets, which applies to

the operations of companies offering financial and investment services, such as credit institutions, investment services companies and fund management companies

• payment and settlement systems
• securities and derivatives trading
• the book-entry system
• monitoring of financial markets
• prevention of money laundering on financial markets
• the penalty system of financial market regulation
• crisis resolution and
• the monetary and central banking system. 

Predicting the course of the war is difficult, which also makes it difficult to predict the eco-nomic impact of the war. However, it is possible to outline various scenarios of how the war may progress and to use these scenarios to develop a picture of the impact that the war and sanctions may have on the economy. 

It is also possible to identify the channels through which the war and sanctions can affect the economy. These include: 

• the cost and availability of raw materials and energy from Russia
• the export and import of other goods to and from Russia
• consumer and business confidence, including Finland’s country risk
• the banking and insurance markets, the availability and price of financing and the exposure of banks to Russian risks.

When estimating the impact of the war and sanctions on Finland, we must first assess how they will affect Russia and how they will affect Finland’s trading partners. Then we can estimate both the direct and indirect impacts on the Finnish economy.

Scenarios support the estimation of economic impacts

The economic impact of the war will depend on the duration and scope of the war. The basic scenario assumes that the active phase of the war will be of limited duration and will not expand to neighbouring areas. Imports of energy from Russia into Europe will continue. In such circumstances, Finland's economic growth will slow this year, but not stop or go into recession. This basic scenario is close to what we have already seen hap-pen.  

The basic scenario provides a foundation for other scenarios, in which economic sanc-tions or the war escalate. The first steps in the escalation of economic sanctions, particu-larly Russia’s countermeasures, have already been taken. However, it is still too early to estimate the effects of Russia’s potential countermeasures. In these scenarios, the effects on the Finnish economy and public finances will be larger.

If the war escalates or is prolonged, we also need to estimate what effects this will have on Ukraine – on the one hand from the perspective of refugees and the support needed by Ukraine, and on the other hand from the perspective of potential problems in produc-tion. Though Ukraine is a small country economically speaking, disruptions in Ukraine will affect Europe through refugees, the increased need for support and the disruption of production chains.

Impact on public finances

When economic and employment growth slow, public finances come under increased pressure. The deeper and wider the conflict, the more unemployment will increase. The need to increase certain types of public expenditure puts pressure on public finances.

Public administration is prepared for disruptions and has worked on preparedness for years. Different authorities work together to compile a joint situation picture. The Ministry of Finance is responsible for the coordination of preparedness in public administration. 

In Finland, preparedness is built on a wide base and is the responsibility of both the public authorities and the private sector. The Ministry of Finance focuses on measures taken by central government authorities, municipalities and wellbeing services counties. Every authority has a statutory duty to be prepared and to secure the rights of citizens in all situations. The authorities review their plans based on various scenarios, and many authorities work closely together with business and industry, because preparedness is a matter for the whole nation.  

Municipalities and wellbeing services counties are broadly responsible for their own preparedness. They are responsible for preparing for everyday incidents, such as ensuring water and energy supplies. The regional administration authorities are responsible for the coordination of preparedness in their regions.

The Ministerial working group on developing the digital transformation, the data economy and public administration is currently working on a situation picture of preparedness in public administration and will assess necessary development measures.  

Ministerial working group on developing the digital transformation, the data economy and public administration 

The Government is responsible for the management of cybersecurity. The Ministry of Finance is responsible for ICT matters in public administration and for the information security and cybersecurity of public services. Among other things, the Ministry supports the development and maintenance of preparedness in the provision of services and in public administration. The National Cyber Security Centre is responsible for producing and maintaining situation awareness with respect to cybersecurity.

The Ministerial working group on developing the digital transformation, the data economy and public administration is responsible for cybersecurity and the preparedness of public administration

The ministerial working group makes the necessary policy decisions on measures to secure the functioning of society and the digital operating environment in the event of cybersecurity incidents and cyber influence activities. It also makes decisions on the preparedness of public administration in the situation caused by Russia’s invasion of Ukraine. The Government added this to the tasks of the ministerial working group on 10 March 2022.

Preparedness in the Ministry of Finance’s branch of government

The Ministry of Finance's branch of government includes the Government ICT Centre Valtori and the Digital and Population Data Services Agency. Valtori is tasked with ensuring that the information security and cybersecurity of the services it is responsible for and that the management of continuity and preparedness meet the set requirements in a rapidly changing operating environment. In order to meet these requirements, Valtori creates and further develops a comprehensive situation awareness and observational capacity with respect to cybersecurity. This makes it possible to react quickly to information security incidents and disruptions.
 
The Digital and Population Data Services Agency promotes the digitalisation of society, secures the availability of data, and provides services for the life events of its customers. The agency is responsible for many service packages that must operate securely, smoothly and without interruption in order to ensure the functioning of society. The agency’s task is to ensure that these services are reliable and secure.

Finland has a long-standing and well-functioning tradition of cybersecurity preparedness

Nearly all of the cybersecurity incidents witnessed in Ukraine over the past decade have also been seen, experienced and repelled in Finland. This demonstrates Finland’s expertise and level of preparedness in the field of cybersecurity. With respect to Russia’s invasion of Ukraine, we continually share information with various authorities both domestically and internationally. 
 
Ministerial working group on developing the digital transformation, the data economy and public administration https://vm.fi/en/ministerial-working-group-on-developing-the-digital-transformation-the-data-economy-and-public-administration
 
National Cyber Security Centre