Govt announces €5.5b supplementary budget following coronavirus

The government on Tuesday announced a record-high supplementary budget of 5.5 billion euros to overcome the impact of the coronavirus outbreak, Finance Minister Katri Kulmuni said at a press conference on Tuesday.

The increase in appropriations in the fourth supplementary budget proposal for 2020 is approximately EUR 4.1 billion and the decrease in revenue is approximately EUR 1.2 billion. The need for central government net borrowing would increase by about EUR 5.3 billion. This means that overall central government net borrowing would be approximately EUR 18.8 billion in 2020, said a government press release.

The fourth supplementary budget proposal for 2020 will be submitted to Parliament on Friday, 5 June.

The government also decided to extend the target timing of stabilizing the ratio between public debt and gross domestic product from 2023 to 2030, she said, adding that the longer time frame would ease the pressure.

The coronavirus (COVID-19) crisis has had a considerable impact on people’s livelihoods and everyday lives, the ability of businesses to operate viably, and the shape and direction of the Finnish economy.

This fourth supplementary budget proposal for 2020 is part of the Government's coronavirus crisis follow-up package, which focuses on ensuring an economically, ecologically and socially sustainable emergence from the crisis.

the Government has decided to introduce a wide-ranging package of measures worth about EUR 320 million for promoting the wellbeing of children and young people.

A total of EUR 159 million is proposed for the Ministry of Education and Culture’s administrative branch, for promoting wellbeing among children and young people.

An appropriation of EUR 70 million is proposed for balancing up the learning deficit created in primary and lower secondary education during the distance learning period. An allocation of EUR 14 million is proposed in support for the learning, development and wellbeing of children in early childhood education and care.

Funding of EUR 17 million is proposed for the study revision and review needs of pupils in general upper secondary schools and for support measures. In vocational education and training, a sum of EUR 30 million is proposed for study supervision aimed at students who have discontinued their studies or are in danger of doing so, and for study guidance for students who are about to complete their studies, as well as for enabling competence demonstrations.

As part of the wellbeing package for children and young people, an allocation of EUR 10 million is proposed for the piloting of a model supporting the uptake of leisure activities among young people.

The purpose of the model is to provide more free-of-charge after-school clubs. An increase of EUR 12 million is proposed for strengthening youth work with schools and educational institutions and for outreach youth work.

In addition, more resources are proposed for higher education institutions and the Finnish Student Health Service, for example for more guidance and more support for the student wellbeing services.

The Government also proposes that EUR 112.3 million be provided as increases in central government transfers to local government for basic public services to support children, young people and families during the coronavirus crisis.

A total increase of EUR 60 million is proposed for public employment and business services. Of this sum, EUR 45 million is proposed for initial training needs, labour market training for the under 25s, creating more summer jobs, and purchasing services for young people, among other things.

The Government is concerned about the livelihood of every individual, and will secure the funding for unemployment security. An increase of EUR 20 million is proposed for the operating expenses of the Employment and Economic Development Offices (TE Offices) to be used, for instance, in client assistance.

A total increase of EUR 812 million is proposed for central government’s share of unemployment security. Of this, EUR 600 million is connected with the temporary amendment of the Act on Financing of Unemployment Benefits, which means that this year central government is funding the portion of earnings related unemployment allowance in a lay-off period that corresponds to basic unemployment allowance, and EUR 40 million is for the temporary reduction in the element financed by the unemployment funds. Continuation of the temporary changes made earlier to unemployment security and to labour legislation until the end of the year will generate a need for additional appropriations totalling EUR 123.5 million.

To alleviate the financial distress caused by the coronavirus crisis, the Government proposes a fixed-term improvement in basic social assistance between 1 August and 31 December 2020. An appropriation of EUR 60 million has been allocated for the improvement.

The Government has decided to add a total of EUR 60 million to central government transfers to municipalities for services for older people.

The stimulus package includes a number of infrastructure network projects, with budget authority totalling approximately EUR 404 million. These include a total budget authority of EUR 156 million for infrastructure projects associated with a Metsä Group bioproduct mill investment, and the investment decision is conditional upon this. The stimulus package also includes a proposed EUR 30 million for basic transport infrastructure management to cover road surface repairs.

The Government proposes a further EUR 340 million in budget authority for interest subsidies for state-subsidised housing production as a way of increasing the amount of affordable housing.

For renewing the Border Guard's technical surveillance system for land and sea borders, an increase of EUR 10 million is proposed.

A total of EUR 124 million is proposed for a one-off increase in student intake in higher education institutions, with the aim of increasing the number of available student places by 4,800.

As part of the RDI Roadmap, the piloting of partnership models will be launched, with a proposed budget authority of EUR 20 million for RDI grants to Business Finland.

An authorisation to grant EUR 60 million is proposed for continuing the business campaign for large, leading companies launched early this year.

Budget appropriations are proposed for grants to phase out oil heating in both households and municipal buildings, EUR 45 million in total for 2020. Budget authority of EUR 20 million will be allocated to major energy-subsidy pilot projects.

EUR 13.1 million is proposed for Metsähallitus, the state-run enterprise, for the rehabilitation of nature sites and the development of nature tourism. A sum of EUR 53 million is proposed for projects involving green areas, water services and forest conservation, of which EUR 20 million would be an additional appropriation for voluntary forest conservation.

To support public transport, EUR 100 million is proposed to compensate for the loss of fare revenue in public transport. The amount of government support for walking and cycling will be increased by EUR 18 million in 2020.

The previously agreed national climate fund will be capitalised by EUR 300 million.

The proposed package includes new financial support for business costs, amounting to a proposed EUR 300 million, to be introduced in the business sector.

Further capital funding of EUR 250 million is proposed for Tesi (Finnish Industry Investment Ltd), to increase equity financing for companies.

In the supplementary budget proposal, altogether approximately EUR 1.4 billion is proposed for supporting local government and hospital districts.

An increase of more than EUR 770 million is proposed in central government transfers to local government for the provision of basic public services.

A grant of EUR 200 million is proposed for hospital districts to offset the costs and potential financial deficits caused by COVID-19.

Negotiations have concluded on land use, housing and transport agreements with the urban regions of Helsinki, Turku, Tampere and Oulu. The agreements promote sustainable transport projects and affordable housing production, especially in areas that have good public transport links. The Government undertakes to reserve EUR 755.8 million for measures in the transport sector.