Government decided on third supplementary budget proposal for 2020
This supplementary budget proposal focuses in particular on easing the financial situation of businesses and covering the costs of managing the coronavirus situation and combating the effects. In further supplementary budget proposals to be made this year, the Government will also assess the need for other coronavirus-related appropriation increases and, more broadly, measures to support the economy. Stimulus measures will be proposed in the next supplementary budget proposal, which will be submitted at the start of June.
Support for financial situation of businesses continues
An additional EUR 700 million is proposed for share acquisitions in state ownership steering. The appropriation may also be used for arrangements to increase the capital of state majority-owned companies and state associated companies. The proposed increase is in connection with the financing of share subscriptions, where the state will subscribe shares in a share issue arranged by Finnair Plc. The state may also participate in other capitalisation arrangements if necessary. The planned share issue and other possible capitalisation solutions are necessary to strengthen the company’s capital and financial position.
Due to the coronavirus crisis, the unemployment security expenditure for which the Employment Fund is responsible is increasing significantly. The Fund requires debt financing to cover the deficit and ensure its liquidity. To secure the availability of funding, it is proposed that a government guarantee be granted for a proposed maximum loan principal of EUR 800 million. The guarantee would also cover interest on the loan principal and any other terms. The maximum liability arising from the government guarantee would be no more than EUR 880 million.
It is proposed that the Government may grant a government guarantee of up to EUR 432 million on loans that are granted under the European instrument for temporary support to mitigate unemployment risks in an emergency (SURE). It is further proposed that the Government be authorised to grant a government guarantee of up to EUR 372 million to the European Investment Bank against any losses arising from the pan-European EU COVID-19 guarantee fund. The EU COVID-19 guarantee fund is being established in connection with the European Investment Bank.
An appropriation of EUR 123 million is proposed for supporting food and beverage service businesses, to be used for compensating these businesses for the restrictions imposed on their activities, and to support the re-employment of their staff.
Additional expenditure on managing effects of coronavirus pandemic
An increase of EUR 10 million in the budget authority of the Academy of Finland is proposed for 2020. This is for the purpose of national COVID-19 vaccine and drug development research and research on the efficacy, safety and effectiveness of new coronavirus vaccines and drugs.
A total of EUR 6 million is proposed for expenditure on preparing, acquiring, introducing and maintaining a COVID-19 contact tracing application, and for discretionary government transfers for this, which will reinforce the ‘test, trace, isolate and treat’ approach of the Government’s hybrid strategy.
Impact on central government debt and the balance of central government finances
The increase in appropriations set out in this year’s third supplementary budget proposal is EUR 832 million. The Government’s net borrowing requirement will increase by the same amount. The Government’s net borrowing in 2020 is estimated to total about EUR 13.5 billion.
Inquiries: Markus Lahtinen, Special Adviser to the Minister of Finance (Economic Affairs ), tel. +358 295 530 417