Budget deficit rises to almost €20 billion in latest coronavirus funding round

The budget will be presented to parliament next Thursday, with the aim of opening applications already this year.

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Finance Minister Matti Vanhanen (Centre) talks to journalists outside House of the Estates in Helsinki, 23rd October 2020 / Credit: Lauri Heikkinen, VNK

The Finnish government is increasing debt to almost €20 billion to help the country recover from the economic impact of the coronavirus pandemic.

A new, seventh, supplementary budget agreed on Friday between coalition party leaders will make another €1.5 billion available for businesses; arts and culture; third sector organisations hit by the loss of gambling revenue; Covid-19 vaccines; transport projects; and two new patrol boats for the Border Guard – to support the shipbuilding industry.

Ministers hope to fast-track the supplementary budget through parliament – it will be presented next Thursday – so that the application process for subsidies can be opened before the end of the year.

The extra budget will add €1.8 billion to Finland’s deficit, for a total of €19.8 billion.

“Of that, exactly €10 billion is additional expenditure and recovery measures to deal with the epidemic” Finance Minister Matti Vanhanen (Centre) told journalists.

“In addition, we are losing revenue, mainly tax revenues, of about €6 billion compared with the normal situation. There will also be expenses arising from greater unemployment” he added.

So how much extra money is being allocated to what, exactly? 

In the new budget proposal outlined by Vanhanen on Friday, there’s going to be €410 million extra to help businesses with cost support. There’s also some extra money in this pot which was not allocated during the spring – although critics have said the government set too many strict conditions which meant a lot of companies did not qualify and could not apply.

In health, there’s going to be €90 million set aside to buy a Covid-19 vaccine if one becomes available, in addition to €110 million which has already been allocated for this purpose. Municipalities will get a one-off boost of €350 million to cover Covid-19 test and tracing cost; and €200 million for hospital districts to help with coronavirus-related expenses.

€111 million is proposed for the public transport sector to ensure services continue in the event of a prolonged coronavirus pandemic.

For the arts and cultural sector there will be €23 million to compensate for loss of income and ensure business continuity. Another €7 million will be allocated to the Centre for the Promotion of the Arts. The funding means that individual artists could be compensated with grants for loss of income.

The budget also looked at the effect of a decline in gambling revenues – and propose to compensate those losses to arts promotion, sports and physical education, youth work, science and culture to the tune of more than €350 million.