Government proposes amendments to 2025 budget proposal

Government proposes amendments to 2025 budget proposal

On Thursday 21 November, the Government submitted its proposal to Parliament to amend the budget proposal for 2025. Some items in the proposal concern the Government's EUR 4 billion investment programme. The proposal will increase the revenue estimate by EUR 67 million and the requirement for appropriations by EUR 405 million.

Investment programme included in the Government Programme

The Government proposes new budget authorities and appropriations of more than EUR 1.5 billion for the EUR 4 billion investment programme outlined in the Government Programme. Of this, the new appropriations for 2025 amount to some EUR 141 million and the reductions in appropriations to EUR 27 million. The new appropriations for 2025 will be covered using income from assets as laid out in the proposal.

The proposal would increase the budget authorities and appropriations of the investment programme to some EUR 3.4 billion in total. Additional income to finance the investment programme will be entered as revenue by the end of 2026 and included in future budget proposals. The implementation of the investment programme will not increase the borrowing requirement in general government finances.

Most of the new decisions on the investment programme concern the administrative branch of the Ministry of Transport and Communications. The most significant new project is a proposed EUR 400 million maximum budget authority, which would be the central government's financing commitment to the construction phase of West Railway, provided that West Railway Ltd's other shareholders together match the financing and contribute at least EUR 400 million to the project. In 2025, the central government would capitalise West Railway Ltd with EUR 10.55 million. Under the terms and conditions of the shareholder agreement, the central government would commit to the proposed budget authority by signing the shareholder agreement.

The central government has decided to use the investment programme to finance the following measures included in the land use, housing and transport agreements:

• The Government proposes increasing the appropriation for basic transport infrastructure management by approximately EUR 79 million, which would be allocated under the land use, housing and transport agreements to small, cost-effective projects in the Helsinki, Tampere, Oulu, Kuopio, Jyväskylä and Lahti urban regions, and to other land use, housing and transport projects that receive financing from the appropriation for basic transport infrastructure management.
• A budget authority of up to EUR 15 million and an appropriation of EUR 7.4 million are proposed for 2025 for the planning and implementation of railway and metro station renovations in Helsinki.
• A budget authority of up to EUR 55.5 million and an appropriation of EUR 8 million are proposed for 2025 for the planning and construction of tramlines in the Tampere region.
• A budget authority of up to EUR 144.1 million and an appropriation of EUR 14 million are proposed for 2025 for the construction of tramlines in Vantaa.
• A budget authority of EUR 103.2 million and an appropriation of EUR 5 million are proposed for a project implementing the highway 180 Kurkela-Kuusisto, Kaarina west bypass.
• A budget authority of EUR 190 million and an appropriation of EUR 3 million are proposed for 2025 for a project constructing the Turku ring road of E18 main road 40 in the centre of Raisio.
• A budget authority of EUR 15.5 million and an appropriation of EUR 2 million are proposed for 2025 for a project constructing main road 4 in Palokka, Jyväskylä.
• A budget authority of EUR 64 million and an appropriation of EUR 1 million are proposed for 2025 for a project constructing main road 4 Lahdenväylä (between Kehä I-Kehä III ring roads and Ilmasilta junction).
• A budget authority of EUR 33.7 million and an appropriation of EUR 1 million are proposed for 2025 for a project constructing the Maarinsolmu junction of main road 101 Kehä I ring road in Espoo.
• A budget authority of EUR 11 million and an appropriation of EUR 1 million are proposed for 2025 for a project re-routing the Turku port railway.
• A budget authority of EUR 24.5 million and an appropriation of EUR 1 million are proposed for 2025 for a project constructing the Oulu passenger rail yard.
• An appropriation of EUR 2 million is proposed for the preparation of plans under the land use, housing and transport agreement for the Helsinki region.
• An appropriation of EUR 6 million is proposed for the preparation of road plans under the land use, housing and transport agreement for the Oulu region.

As part of the Government's investment programme, a budget authority of EUR 400 million is proposed for the government support scheme for significant industrial investments promoting the clean transition. The budget authority is not expected to cause any expenditure in 2025.

The Government's investment programme also includes a reform of reimbursements for medical expenses from the Social Insurance Institution of Finland (Kela). A reduction of EUR 27.2 million is proposed for health insurance funding, because the plan to reform the reimbursements has been revised. The appropriation for reforming the reimbursements will remain available for use later.

Revising the impact of government savings

The Government proposes making some changes to the impacts of the savings decisions outlined in the Government Programme and in the spring 2024 government session on spending limits. The changes are largely explained by the progress made in legislative proposals and the consequent revisions of impact assessments.

Concerning the funding of wellbeing services counties, the Government proposes a reduction of EUR 7.2 million for 24-hour services and surgery and EUR 2.6 million for the supervision of healthcare and social welfare, based on the changes affecting these areas. An increase of EUR 1.8 million is proposed for the funding of wellbeing services counties. This is based on the revised estimate of the expected savings that excluding the health checks of driving licence applicants would have on the county services. Finally, a transfer of EUR 4.1 million is proposed from the main title of the Ministry of Economic Affairs and Employment to county funding due to changes in the responsibility for covering the cost of supplementary and preventive social assistance for refugees and beneficiaries of temporary protection.

An increase of EUR 5 million is proposed for basic social assistance as a result of increases in client charges in healthcare and social welfare. In addition, an increase of EUR 1 million is proposed for the appropriation for health insurance, because changes in 24-hour services will increase the need for ambulance transport.

The funding of basic social assistance for refugees and beneficiaries of temporary protection will be transferred from the appropriations for promoting integration to the basic social assistance expenditure in the administrative branch of the Ministry of Social Affairs and Health. The transfer is related to a government proposal to be submitted to Parliament for implementing the Government's savings measures.

Investments in support for Ukraine and in security

EUR 5 million is proposed for the Ministry of the Interior's appropriations for material assistance for Ukraine and the related transport costs.

A total of EUR 0.7 million is proposed for the police and the Finnish Security Intelligence Service to strengthen the security of the residence permit system. A total of EUR 1.1 million is proposed for the police and the Ministry of Finance for launching licence and supervision measures under the new gambling system.

A total of EUR 0.9 million is proposed for the National Prosecution Authority and the courts due to the discontinuation of mediation in domestic violence cases. In line with the Government Programme, all mediation activities will be transferred to the administrative branch of the Ministry of Justice as soon as possible, and no later than 1 January 2026.

To replace the Learjet aircraft fleet, a transfer of EUR 25 million is proposed from the defence materiel procurement appropriations to the Defence Forces' operating expenditure. The procurement of aircraft equipment involves an increase of EUR 52 million in the maximum procurement authority under the operating expenses for 2025. The purchases have been planned using the current appropriations.

An increase of EUR 3 million is proposed for Customs to cover the costs of sanctions control, the national self-financing contribution to the Customs Control Equipment Instrument (CCEI) and the deployment of the Virve 2 service.

Other key appropriation increases

A transfer of EUR 1 million in discretionary government grants is proposed from the promotion of art and culture to the operating expenses of the Finnish Heritage Agency. The Government will ensure, as part of the annual performance target negotiations held between the Ministry of Education and Culture and the Finnish Heritage Agency, that Seurasaari and certain other museums will not be closed. The Government has also taken into account the Finnish Heritage Agency's funding needs in the third supplementary budget for 2024, which Parliament has just approved, by allocating EUR 800,000 in additional funding to the launch and implementation of the programme of activities in the National Museum of Finland's new annex. The additional funding will help to ease the financial situation of the Finnish Heritage Agency and enable a review of the previously announced savings measures.

An increase of EUR 0.5 million is proposed for the appropriation allocated to public lending remuneration due to the revision of the value added tax rate of public lending remuneration. An appropriation of EUR 0.3 million is proposed for the discretionary government grants for producing learning material for people with disabilities.

EUR 2 million is proposed for the operating expenses of the Finnish National Agency for Education to cover the development the National Certificates of Language Proficiency in order to increase the number of completed tests. EUR 1 million will be allocated for developing the methods of recognising foreign qualifications in order to make work-related immigration processes more efficient. The Government will also be prepared to secure sufficient resources for developing the Certificates and the methods of recognising qualifications and for ensuring better implementation it in decisions on spending limits and the budget.

A pilot will be launched to allow part payments of the annual deductible for medicine expenses before reimbursement. In the pilot, the Social Insurance Institution of Finland (Kela) would grant credit to cover the initial deductible for medicine expenses in certain situations. It is proposed that an appropriation of EUR 2.5 million be allocated for 2025 to the pilot.

As part of the area of social justice outlined in the Government Programme, the Government proposes an appropriation of EUR 8.5 million for 2025 to strengthen the Social Insurance Institution of Finland's discretionary rehabilitation activities. In addition, an increase of EUR 0.5 million is proposed for social assistance to cover the increased coeliac allowance paid through social assistance.

A total of EUR 8.6 million is proposed for the compensations paid to victims of the data breach at psychotherapy provider Vastaamo, and for the processing of compensation applications.

As part of the more detailed allocation of the decisions made during the government session on spending limits, the Government proposes that investments be made in the growth, competitiveness and profitability of the bioeconomy sector, focusing on the promotion of food exports. An additional investment of EUR 5.7 million is proposed for promoting food exports to cover projects to reinforce structures in exports promotion, and the development of value chains in the food sector through the Food2.0 key project.

An increase of EUR 2.5 million is proposed for climate measures in the land use sector to strengthen carbon sinks. To improve the increase in growing stock, an increase of EUR 1.5 million is proposed for ash fertilisation through the fixed-term incentive scheme for forestry (METKA). In addition, an increase of EUR 1 million is proposed for SOTKA wetland projects. In addition to climate benefits, SOTKA projects improve the protection of water resources and biodiversity, especially the viability of waterbird populations. In addition, the implementation of the climate measures laid out in the Government Programme will be continued in the land use sector.

As part of the measures to prevent the spread of avian influenza, the authorities have imposed bans on keeping animals on several fur farms. Under the Animal Diseases Act, financial loss that has a significant adverse effect on the livelihood of an operator may be compensated, if the loss has been caused by a measure to prevent the spreading of an animal disease or a measure to combat a disease and it prevents or hampers animal production. Claims for compensation may be submitted in November, and the Government will make the decisions on funding any compensation in the first supplementary budget for 2025, which will be submitted in early 2025.

A budget authority of EUR 10 million and an appropriation of EUR 1 million are proposed for 2025 for the modernisation of the rail traffic control system and for investment in repairs (implementation phase of the Digirail project).

A reduction of EUR 16 million, corresponding to the index increase, is proposed for the National Television and Radio Fund. This amendment is in line with the proposal of the parliamentary working group on the Finnish Broadcasting Company.

A budget authority of EUR 85 million is proposed for 15-year contracts on ferry links in the archipelago (four route areas). These longer contracts can improve island transport and reduce its environmental impact.

EUR 0.3 million is proposed for producing policy scenario calculations for the Energy and Climate Strategy and the Medium-term Climate Policy Plan. A total of EUR 0.4 million is proposed for the regional state administrative agencies for dealing with environmental protection and water issues, and for monitoring the home delivery of alcohol.

The budget appropriations allocated to Business Finland's operations abroad will be transferred from the administrative branch of the Ministry of Economic Affairs and Employment to the administrative branch of the Ministry for Foreign Affairs from the beginning of 2025. This will involve an appropriation transfer of approximately EUR 21 million.

Other factors explaining increased appropriation requirements

The Government proposes that the appropriations for the EU Recovery and Resilience Facility (including the REPowerEU package) be increased by EUR 174 million in total for 2025, for example due to changes in the payment schedule. This amendment to the budget proposal also includes some other changes to the timing of appropriations. In addition, the appropriation requirement for value added tax expenditure is estimated to be around EUR 80 million more than in the Budget.

An increase of EUR 26.7 million is proposed for the appropriations covering student financial aid. This is explained by higher guarantee liability payments of student loans and student loan compensation expenditure, and by increased use of interest assistance.

Revenue estimate to be increased by EUR 67 million

In total, the revenue estimate will be increased by EUR 67 million to EUR 76.7 billion. The Government proposes reducing the tax revenue estimate by EUR 72 million. Tax revenue from earned income and capital income will be reduced by EUR 23 million, because the public service broadcasting tax included in personal taxation will be eased in line with the proposal of the parliamentary working group on the Finnish Broadcasting Company. Revenue from value added tax will be reduced by EUR 33 million and revenue from the excise duty on soft drinks by EUR 16 million, because the budget proposal does not yet include the planned increase in the value added tax rate on sweets.

Based on an updated estimate, revenue from the sale of assets and dividend income will be increased by EUR 150 million. This revenue will be used to finance the Government's investment programme.

Net government borrowing to increase by EUR 338 million

The Government proposes increasing appropriations for 2025 by EUR 405 million to EUR 89.2 billion. Taking into account the changes in appropriations and revenue estimates, the proposal will increase net government borrowing by EUR 338 million. Net borrowing in 2025 is therefore expected to total around EUR 12.4 billion.

Inquiries: Mikko Martikkala, Special Adviser to the Prime Minister in Economic Affairs, tel. +358 295 708 3932, Jussi Lindgren, Special Adviser to the Minister of Finance in Economic Affairs, tel. +358 295 530 514, Laura Ollila, Special Adviser to the Minister of Education, tel. +358 295 330 130, Marjo Loponen, Special Adviser to the Minister of Agriculture and Forestry, tel. +358 50 308 5411

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