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Government reaches agreement on second supplementary budget proposal for 2020 and the General Government Fiscal Plan for 2021–2024

Government Communications Department 8.4.2020 14.07 | Published in English on 8.4.2020 at 19.28
Press release 231/2020

The Government is committed to protecting people’s wellbeing and the ability of businesses to cope during the coronavirus crisis in Finland, with as few detrimental human and economic consequences as possible. With the agreement reached here, the Government is supporting people’s health and livelihoods, improvements in the situation for municipalities, business activity, rural businesses, culture and sports. Besides the decisions already made, the Government is also preparing measures to support the rapid recovery of the economy after the crisis, and these will be presented in a supplementary budget proposal in May.

The Government will reimburse in full the costs incurred in the healthcare system and by public authorities as a result of the coronavirus crisis. An additional appropriation of EUR 600 million is allocated for the purchase of protective and other equipment and medicines through the National Emergency Supply Agency. The package of support intended to safeguard business activities will be increased by approximately EUR 1 billion. The Government is allocating roughly EUR 1.5 billion for helping people cope with daily expenses. The cyclical benefit expenditure in the budget can be adjusted as necessary.  In addition, parents who are absent from work and not paid because they are staying at home with children under the age of 10 can apply for temporary support.

Municipalities will face significant financial difficulties as a result of the coronavirus crisis. As the first step to ease these difficulties, the Government will allocate EUR 547 million to compensate for the loss of municipal income tax revenue in 2020. The Government is also preparing a municipal support package for the May supplementary budget proposal, which will amount to a minimum of EUR 1 billion.

More than EUR 60 million will be allocated to those involved in culture, sport and youth work, as these sectors have been badly affected by the crisis. EUR 40 million will be invested in rural business activities.

In the next supplementary budget proposal, to be published in May, the Government will propose measures to help the economy recover rapidly. The Government will also begin the activation of the exceptional situation mechanism, as described in the Government Programme.

In addition to the stimulus measures, it will be necessary to explore measures that could help to get Finland back on track towards sustainable growth, high employment and sustainable public finances after the crisis. As previously outlined, the Government will prepare a roadmap defining the potential of a range of measures to reduce the sustainability gap. In order to safeguard the Nordic welfare society, a balanced mix of both short-term and long-term measures will be necessary. The Government is committed to sharing the burden of the crisis in a way that is socially and economically just, ecologically sustainable, and fair across generations.

Economic stimulus and measures to strengthen the sustainability of public finances will be designed and chosen so that they will support the Government’s carbon neutrality target, the move away from fossil fuels and the transition to a carbon-free circular economy in accordance with the Government Programme. This will ensure that the economy and economic competitiveness remain sustainable in the long term, risks are reduced and sustainable jobs are created across Finland.

Economic outlook

The coronavirus pandemic and measures to prevent the spread of the virus have weakened the global economic outlook. Finland’s economy is estimated to contract by 5.5% in 2020 as both exports and domestic demand will shrink. However, in the Ministry of Finance’s economic forecast, the impact of the coronavirus is expected to ease off, helping the economy recover towards the end of 2020.

The slow-down in economic growth forecasted by the Ministry of Finance’s Economics Department is based on the assumption that the measures limiting economic activity would last for 3 months. However, estimates are uncertain as to the duration of the restrictions preventing the spread of the virus.

The new macroeconomic forecast of the Economics Department of the Ministry of Finance, which also takes into account the consequences of the coronavirus outbreak, will be published on 16 April 2020.

Second supplementary budget proposal for 2020

In the first and second supplementary budget proposals for 2020, the Government has introduced many fixed-term and targeted measures to combat the impact of the pandemic on human health and on the economy. In terms of appropriations for on-budget activities, the changes based on these decisions will amount to an investment of around EUR 4.1 billion, some of which will be deferred for subsequent years. Moreover, the adjusted tax payment arrangements will weaken the central government finances by around EUR 1.4 billion in 2020, as the central government will compensate municipalities for the loss of income tax revenue. This year, the temporary arrangements relating to self-employed people’s social benefits and corporate social security contributions will also leave social security funds in a weaker financial position.

Government supporting businesses through the crisis

Various forms of support for businesses are being introduced and expanded in 2020 in response to the coronavirus situation.

Business development support for small and medium-sized enterprises for combating the effects of the coronavirus crisis will be increased by EUR 200 million in relation to previous decisions. Similarly, Business Finland’s grant authorisations will be raised by EUR 100 million to support companies.

An increase of EUR 300 million is also proposed in Business Finland’s authority to grant loans.

A further EUR 150 million in discretionary government grants to municipalities compared to previous decisions is proposed to enable municipalities to support those who are sole self-employed. The purpose of this financial support is to secure the ability of sole self-employed people to remain in business during the deteriorating economic conditions caused by the coronavirus.

Capital funding of EUR 150 million is proposed for Tesi (Finnish Industry Investment Ltd) to set up a new stabilisation programme to help in easing the liquidity difficulties caused by the virus crisis.  Capital investments will be made in companies facing sudden and temporary difficulties due to the crisis.

A one-off increase of EUR 7.5 million is proposed for the operating expenses of the ELY Centres (Centres for Economic Development, Transport and the Environment), and EUR 10 million for the operating expenses of Business Finland, to meet the costs of processing of business support applications.

An increase of EUR 20 million (approximately 340 person-years) is proposed for the operating expenses of the TE Offices (Employment and Economic Development Offices) to boost the personnel resources required to meet the need for advice and services related to the rapid increase in codetermination procedures in companies.

The Government proposes that EUR 30 million be allocated to companies engaged in business activities in rural areas and EUR 10 million to companies engaged in fisheries as temporary aid for combating the negative effects of the coronavirus epidemic and for controlled adaptation to the crisis.

A transfer of EUR 6.5 million to the Development Fund of Agriculture and Forestry (Makera) is proposed for the purpose of preparing for an increase in the guarantee liabilities on state guarantees granted from the Fund, and for an increase in guarantee losses.

The Government proposes guarantees of up to EUR 600 million for shipping companies to operate and maintain cargo transport essential to the security of supply during the coronavirus crisis.

Additional appropriations for the procurement of personal protective equipment

To ensure the availability of personal protective equipment, medical devices and medicines, the Government proposes an additional appropriation of EUR 600 million for their procurement through the National Emergency Supply Agency. This is to ensure a sufficient level of protection and continued functioning of society during the crisis.

More than one billion euros for income security

Temporary support is available on application to parents who are off work without pay due to the epidemic. This new type of benefit is equal to the minimum amount of parental allowance (EUR 723.5 per month). The Government proposes that EUR 94 million be reserved for this. The support would be available to parents who are at home, absent from work without pay while caring for a child in early childhood education and care or a child aged under 10 in basic education who would be entitled to contact teaching during the state of emergency. The benefit would also be available to persons arriving in Finland from abroad who have been placed in quarantine-like conditions and are therefore away from work without pay.

An increase of approximately EUR 1.1 billion is proposed in total for the central government’s share of the earnings-related component of unemployment benefit and job alternation compensation, and of the basic security component of unemployment benefit. The increase in job losses and lay-offs account for EUR 794 million of the total increase. To expedite the processing of benefit applications, EUR 20 million is allocated to support the operations of the unemployment funds.

The Government has submitted to Parliament proposals for an act on the temporary right of self-employed people to receive unemployment security, and for acts on the temporary amendment of the Unemployment Security Act, the Act on Financing Unemployment Benefits and the Act on Unemployment Funds. In the supplementary budget proposal, the Government is making approximately EUR 272 million available for these changes in unemployment security, including mechanisms to safeguard the livelihoods of self-employed people.

An increase of EUR 169 million is proposed for the financing of basic social assistance and an increase of EUR 177 million for housing allowance expenditure due to the deteriorating employment outlook.

An additional appropriation of EUR 30 million is proposed for the central government’s share of expenditure arising from the Self-Employed Persons Pensions Act, due to the reduction in the earned income of the self-employed and in the revenue from pension insurance contributions.

The Government proposes an appropriation increase of EUR 41 million for the operating expenses of the social security funds of the Social Insurance Institution of Finland, to ensure the efficient processing of benefits.

Supporting culture, sport and youth work

The culture, sport and youth work sectors have been hit hard by the effects of the coronavirus epidemic. The Government has decided to respond to the difficult situation with a support package amounting to more than EUR 60 million.

An appropriation increase of EUR 40 million is proposed for the Ministry of Education and Culture due to the loss of ticket revenue and other income in the field of arts and culture as a result of the coronavirus crisis. The increase will also make it possible to compensate professionals, artists, self-employed workers and others in the cultural sector for their loss of income and to reimburse their outgoings.

In order to reduce the impact of coronavirus, the Government proposes an appropriation increase of EUR 3 million for discretionary government grants for the providers of basic education in the arts other than those receiving central government transfers based on teaching hours. In addition, the Government has decided to compensate for the net losses in liberal adult education and basic education in the arts in the third supplementary budget proposal for 2020.

In order to reduce the impact of the coronavirus in the field of sports and physical activity, an appropriation increase of EUR 19.6 million is proposed for the administrative branch of the Ministry of Education and Culture. The increase makes it possible to award grants for safeguarding sports and other activities organised by clubs and societies, and for ensuring the continued operation of sports training centres.

As a result of the loss of event revenue and other income due to the coronavirus crisis, the Government proposes that an appropriation increase of EUR 2.5 million be allocated for government grants to youth organisations and youth centres. An additional appropriation of EUR 1.5 million is proposed for youth workshop activities and outreach youth work to cover the additional costs caused by the epidemic.

In addition, the Government has decided that the 2020 government budget session, coming up in the summer, will consider the future and current use of the central government's gambling revenue within the context of central government revenue and expenditure in general. In 2020, the appropriations required to fully compensate for the decrease in this revenue will be included in the later supplementary budget proposals for 2020.

Safeguarding the operations of authorities

In addition to the amount allocated in the first supplementary budget, the Government proposes for the Border Guard an additional appropriation of EUR 8.4 million, of which EUR 5.8 million will be allocated for continuing border control at internal borders from 14 April 2020 to 13 May 2020. Border control at internal borders in the EU and the Schengen area was reintroduced at Finland's borders on 19 March 2020.

An appropriation increase of EUR 2.2 million is proposed for the Digital and Population Data Services Agency to cover the increased costs of the public helpline service.

An increase of EUR 2.9 million is proposed for the Regional State Administrative Agencies, to cover expenditure arising from additional duties under the Communicable Diseases Act and the Emergency Powers Act.

An additional appropriation of EUR 2.5 million is proposed for the increased costs of high capacity provision within the remote services provided by the Government ICT Centre Valtori.

An additional EUR 1.1 million is proposed for the Matriculation Examination Board to cover the costs arising from the exceptional arrangements for the 2020 matriculation examination due to the coronavirus epidemic.

An increase of EUR 1.9 million is proposed for the operating costs of the Finnish Medicines Agency (Fimea) in order to secure the pharmaceutical services required by the epidemic and to ensure the capacity of ICT services.

The Government has decided that the authorities will be reimbursed the exceptional costs arising from the management of the coronavirus epidemic. The reimbursement will cover the actual amounts of expenditure, and the corresponding appropriations will be included in the 2020 supplementary budget proposals. This applies, for example, to the police force’s increased expenditure.

Supporting municipalities and making other changes to appropriations

The Government proposes that municipalities be compensated for the temporary delays in receiving municipal income tax, corporation tax and real estate tax revenue caused by changes made in tax payment arrangements. For the current year, an appropriation increase of EUR 547 million is proposed for this compensation for loss of tax revenue. A corresponding reduction will be made in municipal appropriations in 2021. This will balance out the accumulation of municipal tax revenues during the temporary period of payment arrangements.

An increase of EUR 1.4 million is proposed to cover expenditure on water resource management and use aimed at safeguarding the operation of water supply and sewerage systems during the coronavirus epidemic.

An appropriation increase of EUR 6 million is proposed for national electronic client information systems in healthcare and social welfare. The aim is to extend the assessment of COVID-19 symptoms in the Omaolo online service to new hospital districts and to increase the provision of online appointments in public healthcare.

An increase of EUR 5 million is proposed in grants to organisations and foundations to promote health and social wellbeing. The increase will be allocated through a call for government grant applications from organisations in order to respond to the coronavirus crisis.

Sharp fall in central government revenue

There is a substantial decrease in the general level of economic activity as a consequence of the coronavirus epidemic. A sharp fall is forecast in the full-year’s GDP for 2020, which will be evident in almost all tax categories. The decline in tax revenues is attributable not only to the deterioration in the general economic situation but also to the measures taken to curb the spread of the virus epidemic and the supportive fiscal measures to ease the position of businesses that find themselves in financial difficulty. The combined effect of these is such that tax revenue is forecast to drop by a total of EUR 4.7 billion.

Modified terms for tax payment arrangements and payment deferrals, applicable for a temporary period, will help ease the situation, as will a reduction in late-payment interest from seven down to four per cent. The opportunity to rearrange payments apply to all taxes.  In the government proposal, in regard to the Act on Surtax and Penal Interest, the arrangements are expected to mean that EUR 766 million in central government tax revenue will be deferred until next year.

Corporation tax revenue will fall short of the previously budgeted figure by EUR 1.4 billion due to the substantial decrease in business profitability. The rise in lay-offs and job losses is reflected in the tax revenues on earned income and capital income. This figure is forecast to be about EUR 1.1 billion below the budgeted amount.

The increase in uncertainty, the restrictive measures taken and the contraction in household incomes are all reflected in consumption behaviour, with VAT revenue expected to be down by approximately EUR 1.7 billion. Some EUR 571 million of this constitutes tax payments deferred until 2021, based on the related government proposal. Households are delaying larger purchases, which is visible in, for instance, the level of car tax revenue as vehicle sales decline.

The Government proposes that the estimate of property income be reduced by EUR 1.1 billion. This is because in the current market no capital gains are expected on the sale of shares due to the sharp fall in stock markets.

Actual revenue (i.e. revenue excluding net borrowing) will be down by a total of approximately EUR 5.8 billion.

Impact on central government debt and the balance of central government finances

In its second supplementary budget proposal for 2020, the Government proposes additional appropriations of approximately EUR 3.6 billion.  Taking into account the reduction of EUR 5.8 billion in actual revenue, the supplementary budget proposal will increase the central government’s net borrowing requirement by EUR 9.4 billion. With the effects of the second supplementary budget proposal, the central government's net borrowing in 2020 is estimated to be about EUR 12.7 billion. These figures do not take into account the effects of the third supplementary budget proposal, which is to be submitted in May. The amount of central government debt at the end of 2020 is estimated to be approximately EUR 119 billion, which is around 52% of gross domestic product (GDP).

General Government Fiscal Plan for 2021–2024

The Government has agreed the General Government Fiscal Plan for 2021–2024. The General Government Fiscal Plan does not include major new policy decisions, but is of a technical nature. Amidst the coronavirus crisis, the assessment of the economic situation is exceptionally uncertain. An economic policy package will be outlined in the government budget session in August 2020.

The General Government Fiscal Plan includes the appropriation effects of the government proposal on the minimum staffing level for care personnel under the Act for Elderly Care and Services. To cover the financial effects of the proposal, central government transfers to local government will be increased, on top of the EUR 70 million already included in the October 2019 spending limits decision, by EUR 137.7 million at the 2023 level and by EUR 195.5 million at the 2024 level. To increase practical nurse training, a fixed-term increase totalling EUR 116.5 million is allocated for 2021–2024.

Additional costs arising from the proposal on the minimum staffing level for care personnel will be funded through a number of savings, of which the largest include cutting pharmaceutical service costs by EUR 60 million from 2023 and reducing private medical care compensation. In addition, savings from the health and social services reform totalling EUR 40 million will be sought from 2023 through digitalisation and enhancing the efficiency of purchased services and competitive tendering.

In addition to decisions on the staffing level for care personnel, the Government has decided to allocate in the spending limits period new, partly fixed-term and partly permanent, additional investments. These amount to, for example, approximately EUR 100 million for 2021, with the main emphasis being on fixed-term increases.

By way of example, a number of these appropriation increases are presented below.

  • EUR 10 million will be allocated in 2021 to police operating expenditure to maintain investment-related capacity.
  • A fixed-term increase of EUR 10 million will be allocated in 2021 and 2022 for Border Guard operating expenditure to safeguard operational capacity.
  • In line with the Government Programme, the Government will broaden and accelerate its measures to counter the grey economy, thereby reducing the tax gap. In 2021–2023, a total of EUR 11.6 million will be allocated through the Action Plan against the Grey Economy. In addition, a total of EUR 2.4 million will be reserved for possible further countermeasures to the grey economy.
  • The Government proposes EUR 2.4 million for 2021 and 2022 to safeguard the operations and develop the quality of training at the Emergency Services College. This is to ensure sufficient and competent staff for the rescue services and urgent help for people.
  • Processing of criminal proceedings in the Finnish Prosecution Service and courts of law as well as implementation of sanctions in the Criminal Sanctions Agency will be secured with an annual additional appropriation of EUR 5 million (EUR 9 million in 2024).
  • Central government transfers for the activities of VTT Technical Research Centre of Finland  will be increased by EUR 10 million in 2021 and by EUR 5 million in 2022. National matching funds for the financing of VTT’s Horizon Europe R&I partnership will improve businesses’ opportunities to participate in EU framework programmes and partnerships.
  • A total of EUR 12 million will be allocated during the spending limits period to the implementation of the pharmaceutical service road map. The aim is to improve pharmaceutical service cost-efficiency while ensuring drug safety and counselling as well as the smooth running, availability and accessibility of services.
  • The Government will allocate an additional appropriation of EUR 22 million to extend compulsory education in 2024, when all age cohorts will be fully within its scope.
  • Operating conditions for civil society organisations to support foreign policy discussion will be strengthened with EUR 300,000 annually.
  • Municipalities’ climate work and projects will be supported with an appropriation of EUR 4 million in 2021.

The General Government Fiscal Plan, which is due to be approved in a government plenary session on Thursday 16 April, will outline the new expenditure policies in more detail.

Stability Programme

On 16 March 2020, the Government, in cooperation with the President of the Republic, declared that there is a state of emergency in the country, as referred to in section 3 paragraphs 3 and 5 of the Emergency Powers Act. The exceptional circumstances referred to in the EU Stability and Growth Pact also exist, as a result of which the General Government Fiscal Plan for 2021–2024 only presents a medium-term economic projection for general government finances based on an independent forecast and does not include the Stability Programme, which will be submitted separately by the end of April in a more concise form than usual, as agreed by the European Commission and Member States. It is not appropriate to prepare the Stability Programme in its standard form, which sets multiannual targets for the budgetary position of general government finances and gives the Government’s assessment of the achievement of the Medium-Term Objective (MTO), until the economic situation becomes clearer.

On-budget finances, expenditure, revenue and balance

Central government on-budget revenue estimates are based on an assessment of the medium-term development of the economy. Economic growth is forecast to turn negative in 2020 due to coronavirus and the resulting shock to both Finland and the world economy. Central government tax revenue will also decline in 2020 as a result of significant measures to support business, of which the largest is temporarily facilitating payment arrangements on more favourable terms. The economy will recover during 2021 and 2022, however, at which time delayed tax revenue is also expected to accrue to the budget retroactively. The revenue estimates of the spending limits period have taken into account the tax criteria changes decided in the Government Programme. Actual on-budget revenue as well as tax revenue is expected to grow by an average of approximately 1.5% per year in 2020–2024.

Central government on-budget revenue, expenditure and balance, EUR billion
 

2020, B + SB I + SBP II

2021, GGFP 2022, GGFP 2023, GGFP 2024, GGFP
Revenue, excl. net borrowing 49.7 54.3 54.6 55.2 56.4
Expenditure 62.4 61.0 61.9 62.9

63.8

Deficit -12.7 -6.7 -7.3 -7.6 -7.4

On-budget expenditure for 2021 is expected to be EUR 61.0 billion. The level of expenditure will decrease from the figure budgeted for 2020, even though expenditure for 2021 includes EUR 1.5 billion of fighter aircraft procurement costs, which will begin to be reflected in central government expenditure to a significant extent in 2021 and beyond.

Compared with the autumn 2019 spending limits decision, administrative branch expenditure in 2021–2023 will rise on average by approximately EUR 1.7 billion per year. Of the change, approximately EUR 0.4 billion per year will be due to index adjustments, while cyclical expenditure (e.g. unemployment security, housing allowance, basic social assistance) will account for EUR 0.7–1.0 billion per year. Due to the coronavirus pandemic, the Government has allocated significant appropriations in the 2020 supplementary budgets to  alleviate the financial situation of businesses, among other things. These measures will also have ripple effects on appropriations in the spending limits period.
On-budget expenditure for 2021 is expected to be EUR 61.0 billion. The level of expenditure will decrease from the figure budgeted for 2020, even though expenditure for 2021 includes EUR 1.5 billion of fighter aircraft procurement costs, which will begin to be reflected in central government expenditure to a significant extent in 2021 and beyond.

Central government debt will grow throughout the spending limits period and it is expected to be approximately EUR 148 billion in 2024, which represents approximately 58% of GDP.

State of and support for local government finances

Coronavirus will impact local government finances particularly through growth in healthcare expenditure and a reduction in tax and fee income. The central government will participate in compensating the municipalities for expenditure caused by coronavirus. The purpose of supporting the municipalities is to safeguard conditions for the provision of basic public services and to alleviate the challenges to local government finances due to the state of emergency.

The effects of the coronavirus crisis on local government finances will depend on the scale and duration of the pandemic. Assessments of the effect will become clearer during the year. Decision-making on assistance and support to municipalities therefore needs to be phased. The Ministry of Finance will closely monitor the advance of the state of emergency in order to decide on additional measures.

The municipalities are diverse and the effects of the crisis on different municipalities will be different. There are also significant differences in the municipalities’ financial situations. The support package for municipalities will accordingly consist of various measures.

At the first stage, the Government has decided in the second supplementary budget proposal for 2020 to compensate municipalities for estimated temporary tax losses in 2020 as a result of tax payment deferrals.

At the second stage

  • The central government will compensate hospital districts directly with a discretionary government transfer for the additional costs caused by the coronavirus crisis (e.g. intensive care).
  • The municipalities’ corporation tax apportionment will be increased for a fixed period to the end of 2020.
  • The central government transfer for basic public services will be increased for a fixed period to the end of 2020.
  • Discretionary increases will be made in central government transfers.

The scale of the measures directed at municipalities in the second stage will total at least EUR 1 billion. The measures under the second stage will be implemented in a third supplementary budget for 2020.

In addition, in the Government will assess in future supplementary budgets and in the August 2020 government budget session the effects of the coronavirus crisis on the municipalities and will commit, as the impact assessments become clearer, to supplement significantly the package of measures for municipalities, if necessary.  Measures for 2021 will be decided as part of the 2021 budget process.

The effects of the coronavirus situation on the procedure for municipalities in crisis and on the municipalities’ deficit coverage obligation will also be taken into consideration.

In addition to direct crisis support measures, the Government will review by the 2020 budget session the outlook for the future of local government finances and the tasks and obligations of local government.

Exiting the crisis and reconstruction

The Prime Minister’s Office has set up a preparation group to coordinate and prepare within a short timeframe a strategic plan

  1. to limit the detrimental economic, health and social consequences of the immediate crisis stage and to exit the measures decided currently in a timely manner on the basis of an epidemiological and medical situation update and an overall societal assessment;
  2. for post-crisis management measures and their preparation for the various sectors of society. 

Permanent Secretary Martti Hetemäki, Ministry of Finance, will chair the preparation group and Permanent Secretary Kirsi Varhila, Ministry of Social Affairs and Health, will serve as its vice-chair. A working group appointed by the Ministry of Social Affairs and Health will produce for the preparation group the epidemiological and medical situation update as well as forecasts of the health effects of the COVID-19 pandemic, including the adequacy of intensive care capacity.

The objectives of the Government Programme concerning the long-term building of a socially, economically and ecologically sustainable society will be taken into account in the planning of the post-crisis measures.

To support the preparation group, a science panel will be set up to which researchers and experts from different fields of expertise, such as social policy, education policy and economic policy as well as the environmental and climate sciences, will be invited.

To further support the group, a subgroup consisting of representatives of the labour market organisations will be established, which will be able to submit to the preparation group wide-ranging proposals on post-crisis management and reconstruction.

The Ministry of Economic Affairs and Employment and the Ministry of Finance have established a working group to prepare an expert assessment of the crisis impact and of measures that can limit the damage to the Finnish economy. Vesa Vihriälä, Professor of Practice, Economics, will chair the working group.

Towards the post-crisis period in a socially, economically and ecologically sustainable way

For the May supplementary budget proposal, the Government is preparing targeted, fast-acting and fixed-term stimulus measures aimed at mitigating the damage caused by the coronavirus crisis to the Finnish economy and employment.

Due to the state of emergency, the central government spending limits do not restrict the current year. The Government is, however, committed to the central government spending limits system and to the electoral term spending limits set in the General Government Fiscal Plan of 7 October 2019. The spending limits will again be adhered to from 2021. The Government has, however, decided as a deliberate deviation from the spending limits that loss compensation arising from the raising of Finnvera Plc’s domestic funding authorisations as well as appropriation increases from raising the SME support-granting authorisations funded from Business Finland and the ELY Centres will be classified as expenditure outside the spending limits.

Alongside the stimulus measures, it will also be necessary to decide on structural measures to return Finland after the crisis to a path of sustainable growth, high employment and sustainable public finances. As previously outlined by the Government, it is preparing a roadmap that will determine the potential of various measures to reduce the sustainability gap. The first stage in this process will be implemented in connection with the submission of the May 2020 supplementary budget proposal. A balance between short- and long-term measures is necessary to safeguard the Nordic welfare society.

Strengthening the sustainability of public finances will be implemented in a way that secures the services and benefits of the welfare state and their sustainable financing. The Government is committed to ensuring that the burden caused by the crisis is shared in a socially and economically just and ecologically sustainable way and fairly between the generations. An economic policy package will be outlined in the government budget session in August 2020. At this stage, measures that strengthen the sustainability of public finances and employment, taking into account the changes in the economic environment, will be identified.

Economic stimulus measures and measures to strengthen the sustainability of public finances will be planned and selected also to support the Government’s carbon neutrality goal, the move away from fossil fuels, and the transition to a carbon-free circular economy in line with the Government Programme. The Government is committed to acting a way that results in Finland being carbon-neutral in 2035 and carbon-negative quickly thereafter. This will ensure the long-term sustainability of the economy and competitiveness, reduce risks and create sustainable jobs throughout Finland.

The restrictions implemented to slow the spread of the coronavirus epidemic will have negative impacts on learning outcomes, wellbeing and equality among children and young people. The Government will implement a comprehensive programme of measures to mitigate these impacts. The appropriations for the programme of measures will be included in the third supplementary budget proposal for 2020.

In the August 2020 government budget session, the Government will outline the implementation of a sustainable taxation roadmap in accordance with earlier policies. In the same context, the first stage of energy tax reform will be decided as outlined earlier. In addition, the budget session will review the progress of the tax measures to support growth and investment which were outlined in 2019.

The climate fund preparations will continue in line with the Government’s earlier guidelines and the matter will be determined in connection with the May supplementary budget process.

The second supplementary budget proposal for 2020 will be submitted to Parliament in a government plenary session on Thursday 9 April, and the General Government Fiscal Plan for 2021–2024 on Thursday 16 April.

Inquiries:
Joonas Rahkola, Special Adviser (Economic Affairs) to the Prime Minister, tel. +358 295 160 998
Markus Lahtinen, Special Adviser (Economic Affairs) to the Minister of Finance, tel. +358 295 530 417
Jussi Pyykkönen, Special Adviser (Economic Affairs) to the Minister of the Interior, tel. +358 50 477 8354,
Lauri Holappa, Special Adviser (Economic Affairs) to the Minister of Education, tel. +358 295 330 014 and 
Camilla Mäkinen, Special Adviser (Economic Affairs) to the Minister of Justice, tel. +358 295 150 119

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