Prime Minister Sanna Marin (SDP) said political party leaders have reversed spending cuts aimed at sports and culture groups that have been beneficiaries of funding from state gambling firm Veikkaus which has seen shrinking revenues.
The move follows public disagreements this week within her cabinet over culture cuts.
Marin said the state will step in to fill Veikkaus' multimillion euro funding hole "100 percent" in the 2022 budget.
"This is the shared view of all five coalition partners," Marin said, adding that the funding to shore up culture fits into the existing budget framework.
Marin said that last spring when the cuts were planned, the cabinet did not have enough information about how much such measures would impact the sector.
Earlier this week the Ministry of Education and Culture announced plans to cut funding for the arts, culture, science and sport sectors in its 2022 budget, due to declining revenue from state gambling monopoly Veikkaus.
The cuts prompted widespread criticism from the culture sector, with threats of job losses and services contracting due to the austerity measures.
The state betting and lottery firm has meanwhile announced it's cutting up to 190 jobs to help save 15 million euros annually by 2024. The company said that the downsizing was due to a roughly 40 percent decrease in gaming volumes at its physical sales channels.
Last fall, the company shut down thousands of slot machines across the country for an extended period due to the coronavirus crisis, following guidelines from the Ministry of Social Affairs and Health.
While the cabinet has sorted out next year's shortfall in arts and culture funding, the government will face the same problem in 2023 as Veikkaus' revenue declines.
"I hope the events of the past week have clarified the need for long term reform. From 2023 onwards, the situation will be even more difficult," Culture Minister Antti Kurvinen (Cen) tweeted of the arts and culture funding deficit.