Katri Kulmuni interview: “It would be easy if we could just spend our way out of this crisis”

The Finance Minister has been burning the candle at both ends working on domestic budget issues as well as a eurozone rescue package.

File picture of Finance Minister Katri Kulmuni (Centre) at government press briefing, 20th March 2020 / Credit: Laura Kotila, VNK

Finland’s Minister of Finance Katri Kulmuni (Centre) has been burning the candle at both ends.

A marathon 16-hour video conference at the start of the week with her EU colleagues was peppered by three one-hour naps; and then she went into two days of government talks on building a supplementary coronavirus budget.

“You basically need to be on all night long” she says.

Since becoming leader of the Centre Party last September, the Lapland MP has been in the middle of two of Finland’s biggest political stories: first, her role in the ‘palace coup’ that ousted sitting Prime Minister Antti Rinne (SDP) and installed Sanna Marin (SDP) in his place; and now the unprecedented coronavirus pandemic that has thrown the government’s plans into disarray, and forced a restructuring of almost every aspect of Finland’s political, social and economic life.

“If someone would have estimated how the year would be, I would never in my life have imagined what would have happened” she tells News Now Finland in between meetings, and with another round of EU talks coming up later in the day.

Eurogroup Finance Ministers meet via video conference on 9th April 2020 / Credit: European Union

EU financial crisis over pandemic 

It’s those European Union talks which many commentators are saying will define the future direction of the 27-nation block – and in particular the core 17 countries that use the euro as their currency.

Late Thursday night finance ministers reached a €500 billion deal to support eurozone countries as they start to face up to the aftermath of the coronavirus pandemic.

An earlier rescue plan reportedly fell apart along north-sound lines as the Netherlands lead Nordic and Baltic countries in refusing to agree to take on joint debt in the form of ‘corona bonds’ to bail out the worst impacted countries like Spain and Italy.

That shared debt issue has now been avoided, but some Southern European countries will be wondering why the eurozone 17 were so sluggish to come to their aid.

Katri Kulmuni, interviewed a few hours before the final deal was announced, wouldn’t be drawn on what was happening in the ongoing meetings, but says the extent of a north-south eurozone split has been misprepresented.

“I think that perception is a stereotype. It’s based on myth and not reality. The whole of Europe and the eurozone is based on cooperation and that’s the basic ground for all of this, although of course every country has their own red lines.”

“I think that all the national parliament want to have their own budget sovereignty” she adds.

Finnish government leaders announce supplementary budget, 8th April 2020 – Katri Kulmuni in orange dress / Credit: Lauri Heikkinen, VNK

Finland’s latest supplementary budget 

On Wednesday the Finnish Government rolled out its new supplementary budget to help Finland push through, then begin to recover from, the pandemic.

There’s another billion euros of support for businesses; €547 million for municipalities to compensate for the loss of municipal income tax revenues this year – with another billion euros earmarked for them in the next supplementary budget in May.

There’s €60 million for culture, sport and youth work; and €40 million more for rural business activities.

“It would be easy if we could just spend our way out of this crisis, and it would be easily solved if it was only about taking on more debt. But that is just one of the solutions to the crisis. We take more state expenditure to get the economy rolling during the restrictions” the Finance Minister explains.

“But of course the virus is the key thing that we need to tackle, and reconstruction work  after will require also economic stimulus, but then also balancing the economy. The exit strategy overall for how society will be built is a huge thing” she says.

Kulmuni is careful to say that there’s no short term financial fix to the coronavirus crisis, and that a full recovery will take a long time.

“I think it will take years to rebuild, when we take into account the societal and economic impact” she says.

Finance Minister Katri Kulmuni (Centre) talks to journalists outside House of The Estates Helsinki, 8th April 2020 / Credit: Lauri Heikkinen, VNK

Government programme needs reconsideration 

Katri Kulmuni has been one of the more pragmatic ministers in recent days to acknowledge that the current government programme, agreed last June and confirmed again with a change of administration in December, is unworkable on an economic basis due to this exceptional situation.

“Everyone can see the economic situation has dramatically changed, and the government programme has to be re-assessed based on reality” she states.

She says on of her first priorities is that consumption will roll, people need money to consume, and to get money they have to work – hence the support to keep businesses afloat.

“And if they can’t work while businesses are closed and there are layoffs, there is still the social security system that not every country has.”

“We’ve taken care of the things we can do quickly which is direct support for enterprises which is almost €2 billion in Finalnd. We’ve done lots of arrangement with taxation, arrangement to move mortgages and all kinds of things related to the possibilities for companies to survive over this period of time.”

There’s more money coming too in the next budget.

“Then we can hopefully get out from this slowdown, and start economic reconstruction as well.”