Finland announces €4.1bn in extra state spending

Ministers said they needed to spend more to fight the impact of coronavirus.

Finance Minister Katri Kulmuni (left) announced Finland's biggest every supplementary budget. Image: Markku Ulander / Lehtikuva

Finland announced on Wednesday that it would be spending an extra 4.1 billion euros this year, as the government geared up to send much-needed support as the economy dips during the global coronavirus pandemic.

This is the largest supplementary budget planned in modern Finnish history.

Finance Minister Katri Kulmuni said that Finland had learnt the lessons of the 1990s recession, which hit Finland hard. Interest rates are low and lenders trust Finland, so the country can afford to borrow, she added.

She estimated that in a short space of time, the government will take on new debt valued in the 'double digit billions'.

Some one billion euros of that cash would be spent on helping businesses hit by the crisis.

PPE in demand

Prime Minister Sanna Marin also announced some 600 million euros in new spending on personal protection equipment (PPE), which has been in short supply in Finland as the pandemic rolls on.

Finland is also planning to compensate municipalities for falling tax revenues as economic activity declines.

Kulmuni said that the government would introduce payments for parents of children aged under 10 who could not work remotely, to compensate them for staying home to look after their children.

Minister for Economic Affairs Mika Lintilä had said on Tuesday that most of the funding for businesses was so-called direct support, but there would also be some lending as part of the package.

He announced an additional 100 million euros for state export and innovation driver Business Finland to support small and medium-sized companies. An extra 200 million euros would help local economic development centres shore up micro enterprises employing up to five people, while funding to support solo entrepreneurs would be topped up to the tune 150 million euros.

Interior Minister Maria Ohisalo said that extra funding had also been sought for the police, especially with regard to manning the Uusimaa border while it remains closed.

This is the second budget adjustment Finland has made during the pandemic. The first came in late March, when parliament approved 1.1 billion euros in additional spending mainly to support people laid off permanently or temporarily as Finland shut down a lot of economic activity to try and slow the spread of the virus.

Edit: Updated at 4.33pm with details of additional funding for the business sector.