2020
2020 will always be remembered as the first year of the coronavirus pandemic. In mid-March, the State Treasury transitioned to the same emergency work conditions as the rest of the central government, and since then, it has characterised the State Treasury’s management. The State Treasury adopted a crisis management model from mid-March to mid-June, after which it continued operating under a comprehensive remote work model.
The coronavirus pandemic significantly impacted the sustainability of Finland’s general government finances and central government debt. In March, the central government began increasing its cash buffer by engaging in significant additional borrowing. By the end of 2020, the central government’s net borrowing had boomed to EUR 18.3 billion.
Due to the pandemic, the monthly reports on central government finances were refined into comprehensive analyses for the ministry’s use, and the state of the central government’s payment transactions was closely monitored over the spring period.
The coronavirus pandemic also had a significant impact on the Services for Citizens Division. In the spring, the State Treasury was tasked with participating in the drafting of the Act on Fixed-Term Cost Support to Companies and preparing for its implementation at the State Treasury. The functionalities required for the resulting service’s online functionalities, provision and reporting were built in a short period of time in the State Treasury’s environment. In addition, 75 fixed-term public servants were recruited and trained for the organisation implementing the service. The preparation of the implementation was a clear success, and the State Treasury began processing cost support applications in July 2020, with most of the 12,900 applications being processed by September 2020. At the end of the year, a similar type of preparation process for the 2nd cost support scheme was carried out as a new assignment, and the service was opened for applications before Christmas 2020.
To read more about the annual report and figures for 2020, see the final accounts prepared by the State Treasury.
Final accounts 2020 (in Finnish)
2021
2021 will be remembered as the second year of the coronavirus pandemic. The State Treasury continued its comprehensive approach to remote work, and while its ultimate aim was a return to normalcy, it was still forced to adapt to the pandemic’s prolongation. As a whole, the State Treasury succeeded well in its operations from the perspective of its operational objectives and the satisfaction of its customers and personnel.
Finland’s GDP growth accelerated to 3.4% in 2021 after a moderate decrease of 2.9% in the previous year. Despite Finland’s rapid recovery, its economic outlook was threatened by the aggravation of the coronavirus pandemic at the end of 2021, the geopolitical situation at the time, and the changes in the global inflation environment and monetary policy. The other risks that the country faced was a narrower fiscal policy margin and an increase in the costs of its debt management in the coming years. In 2021, the central government’s budgeted gross borrowing totalled EUR 36 billion, of which net borrowing amounted to EUR 11.6 billion. To cover its expenditure and secure a sufficient level of liquidity, the central government opted to slash EUR 8 billion from its budgeted net borrowing, partly due to better-than-expected economic development figures. The impacts of the coronavirus pandemic also increased the amount of advisory and administrative work related to direct government loans and interest subsidy and guarantee portfolios. Additional work was also caused by the financial difficulties of certain customers with larger loans.
The continuation of the pandemic meant that the State Treasury was tasked with continuing the payment of the cost support, closure compensations, and event guarantees paid on the basis of the Act on Fixed-Term Cost Support to Companies. The payments were made in several different stages, with a total of EUR 780 million in cost support being paid in 2021. The payment of the business subsidies went well, and the State Treasury received good feedback on its processing speed, attentive customer service, communications practices, and reporting on the subsidies. In addition to providing cost support, the State Treasure continued its digitalisation efforts, although at a slower-than-intended pace due to the provision of said cost support.
The Municipal Finances Service successfully received and reported on the financial information provided by Finnish municipalities, and it also initiated preparations for the processing of information provided by the wellbeing services counties. The development of group accounting progressed significantly, and the provision of the Suomi.fi Payments service was put out to tender. The Real-Time Economy project, in which we are involved as an implementing party, was launched.
The State Treasury took part in the Government Grant Development and Digitalisation project managed by the Ministry of Finance. The State Treasury’s new statutory task was defined as producing online services for the applicants and recipients of discretionary government grants, and for the authorities issuing said grants. This approach includes three online services: Managegrants.fi, Applyforgrants.fi, and Exploregrants.fi. In the case of the Government Grant Services project, a unit was organised to implement the project, and the ownership of the information system was transferred to the State Treasury. The State Treasury’s other tasks included the acquisition of a whistleblowing channel, in accordance with the related EU directive, and the implementation of the duties related to the monitoring and reporting of the EU’s recovery fund, which were initiated during the year under an extremely strict and critical schedule.
To read more about the annual report and figures for 2021, see the final accounts prepared by the State Treasury.
Final accounts 2021 (in Finnish)
2022
2022 will be remembered as the year when Europe recovered from the coronavirus pandemic before plunging into the first year of a multi-year war. As a whole, and despite the difficulties in its operating environment, the State Treasury succeeded well in its operations from the perspective of its operational objectives and the satisfaction of its customers and personnel.
The outlook for the global economy remained gloomy throughout 2022 with the prolongation of Russia’s attack and the European energy crisis. Inflation continued to rise at an exceptionally fast pace, and the outlook for the euro area remained difficult due to the energy crisis and record-low levels of consumer confidence. The central banks tightened their monetary policy to prevent inflation from spreading and triggering a vicious cycle of rising prices and costs. However, this tightening also increased interest rates across the board while heightening overall uncertainty in the financial markets.
These recurring crises left their mark on the liabilities and risks of the central government’s finances. Central government debt grew significantly both in nominal value and in relation to the size of the economy over the past decade. In 2008, the central government had EUR 54 billion in debt, accounting for 28% of its total production. In 2022, the central government took on EUR 12.7 billion in new debt and increased its total debt amount to EUR 140 billion.
The economic impacts of the coronavirus pandemic and the energy crisis in 2022 caused the State Treasury to enact cost support 5 and 6, the closure compensation, the support for uncovered fixed costs, and the fuel subsidy. The State Treasury received around 26,600 applications for the aforementioned subsidies and paid out a total of nearly EUR 260 million in support. In addition to implementing the cost support, the State Treasury was able to promote the digitalisation of many compensation types.
The long-term and extensive development of central government finances continued in the Real-Time Economy project, in the preparation for Peppol tasks, and in the central government’s procurements. At the same time, efforts were made to ensure the preparation of the final central government accounts, the steering of financial administration, and the development of group accounting. The Valoa website and the Living in Ecosystems initiative were published in Working Life Management Services, both under the Valtiolla.fi initiative. The central government was instructed in the preparation of responsibility reporting for agencies, and the summary of the responsibility reporting for 2021 was published as planned. The production of analysis services, the compilation of joint central government data, and the analysis of the state of the central government’s knowledge-based management were continued as part of knowledge-based management services.
In 2022, preparations were made for the wellbeing services counties’ financial reporting that was set to begin in 2023, although at a later date than planned due to performance and functionality problems related to the Municipal Financial Information Service. The financial information service used by municipalities and wellbeing services counties began authenticating users with the help of the Suomi.fi identification service. The parties involved in the development of knowledge-based management produced statutory analysis and reporting services for the Government, and they were also responsible for compiling the related joint central government data.
The Applyforgrants.fi service opened its first pilot application calls in the summer, and the new services received positive feedback from applicants. As the authority responsible for managing and supervising the implementation of Finland’s Recovery and Resilience Plan (RRP), the State Treasury was able to proceed to the actual implementation of the plan. The tendering process for the central government‘s whistleblowing channel was completed on time at the start of the year, after which the channels were ready for use.
To read more about the annual report and figures for 2022, see the final accounts prepared by the State Treasury.
Final accounts 2022 (in Finnish)
2023
2023 proved to be a difficult year for the State Treasury. Despite this, the State Treasury succeeded well in its operations from the perspective of its operational objectives and the satisfaction of its customers and personnel. In 2023, the results of the State Treasury’s customer satisfaction surveys reached excellent levels (4.2 on average, on a scale of 1–5).
In 2023, global economic growth was dampened by inflation, rising interest rates, and geopolitical tensions. In the autumn, the rapid slowdown in inflation triggered a fall in market interest rates, as expectations for an easing in monetary policy were brought to the fore at an earlier point than expected. Finland’s NATO membership was realised in April 2023, and geopolitical tensions remained high due to e.g. the situation in Ukraine, the Middle East, and Taiwan.
The international sanctions imposed on Russia caused a great deal of additional work for the State Treasury, as a violation of these sanctions by any agency would pose a serious reputational risk to the state and hinder its fundraising activities. As a result, it became commonplace to conduct systematic background checks of beneficiaries in the management of government lending and the payment of business subsidies, as well as in the central government’s procurements.
At the end of 2023, central government debt totalled EUR 156.2 billion, i.e. 55.4% of GDP. Higher interest rates significantly increased the central government’s financing costs compared to the zero-interest environment in previous years.
Despite the increasing difficulties in its operating environment, the central government was able to secure its liquidity and meet its funding needs in 2023. The payment transactions of government agencies also functioned well despite the demanding environment, and the situational picture of their payment transactions was closely monitored and reported.
In lending tasks, the rapid increase in interest rates increased the workload related to the administration of direct government loans and interest subsidy and guarantee portfolios at the State Treasury. The new loan management system was completed and successfully deployed at the turn of 2023/2024.
The wellbeing services counties began operating to their full extent at the beginning of 2023. The funding of the wellbeing services counties’ operations and their deficits contributed to weakening central government finances. Municipal veteran services were transferred to the wellbeing services counties at the start of 2023, and this transition resulted in an increase in the State Treasury’s advisory tasks.
The impacts of rising electricity and fertiliser prices were compensated by the State Treasury’s compensation services on the basis of new legislation. At the start of the year, the Business Cost Support Unit implemented the retroactive electricity compensation scheme for electricity companies, amounting to EUR 223.1 million in total. It also allocated EUR 28.0 million in electricity and fertiliser support to agricultural and aquacultural operators in the summer. In addition, the State Treasury continued the development of its compensation activities by participating in the work of several legislative drafting groups, the preparation of Finland’s accession to NATO SOFA, and the working group for developing the state’s compensation function for crises and disruptions.
The year proved to be a busy one for the government’s corporate services. The long-term and extensive development of central government finances continued in the Real-Time Economy project, in the preparation for Peppol tasks, and in the central government’s procurements. The Valoa website and the Living in Ecosystems initiative were published in Working Life Management Services, both under the Valtiolla.fi initiative. The central government was instructed in the preparation of responsibility reporting for agencies, and the summary of the responsibility reporting for 2021 was published as planned.
In the Government Grant project, the State Treasury’s role as the authority responsible for providing digital services and managing their deployment was realised in the manner that had been agreed upon with the Ministry of Finance. The Applyforgrants.fi service opened its first pilot application calls in the summer, and the new services received positive feedback from applicants.
As the authority responsible for managing and supervising the implementation of Finland’s Recovery and Resilience Plan (RRP), the State Treasury was able to proceed to the actual implementation of the plan immediately after the law’s entry into force in July. During the year, the Ministry of Finance provided the European Commission with data produced by the State Treasury on the common indicators and the objectives of the measures. This data was used to describe Finland’s implementation of the recovery plan.
To read more about the annual report and figures for 2023, see the final accounts prepared by the State Treasury.