The Government has announced a €15 billion bailout package to prop up the economy and support businesses hit by the coronavirus pandemic.
Speaking at a Helsinki press conference on Friday, Prime Minister Sanna Marin (SDP) outlined the steps her coalition government will take, which include up to €15 billion of financing, mainly in the form of financial loans and guarantees.
Although there’s little in the way of direct cash for small businesses, as has been seen in some other EU countries, the package is being welcomed by experts.
“There was a big question about what is happening to the confidence in Finnish industry, and how firms are thinking about this situation. They were very worried. But now confidence is back on track” he tells News Now Finland.
The measures outlined by the Government aim to secure, in particular, the livelihoods of people who are laid off or lose their jobs. They will also make it easier for companies to adapt to the difficult situation.
The biggest chunk of cash is coming through Finnvera, a state-backed financing companies that provides loans for businesses. There’s also an extra €150 million for Business Finland to use for fast-start business support activities – in addition to money already announced to help specifically businesses involved in tourism, creative or performing industries hit by the coronavirus epidemic.
“We strongly strengthen corporate support during the coronavirus epidemic” says Mika Lintilä (Centre) Minister of Economic Affairs.
“We are targeting additional funding for Finnvera, Business Finland and ELY Centers to improve the chances of companies coping with a difficult situation” he adds.
The Government says there’s likely to be a further announcement of more money being made available at regional or municipality level as well.
Taking on extra debt burden
While most of the Government’s financial aid comes in the form of loans – they’re also encouraging businesses first to talk to their banks for extra cash, and saying that banks will be more flexible when it comes to lending money – there is a worry about taking on more debt.
“Of course the debt is a risky thing, but the situation is so acute now that we have to send the message that the state guarantees, and the banks deliver” says EK’s Sami Pakarinen.
“That’s one reasons why you shouldn’t give so much weight to the debt situation. If we didn’t act so rapidly then we would have a situation where there’s a wave of bankruptcies and mass unemployment.”
Pakarinen says the Government cannot guarantee that no firms go under, but that today’s bailout package should give confidence especially if things get moving quickly.
“I would say that lots of things now depend on what happens in concrete terms, how the financial guarantees are transmitted in the banking system” says Pakarinen.
“We need concrete examples for firms and entrepreneurs how and where they should contact, and how they can actually get the finances from the state.”