The Government of Finland has submitted a third supplementary budget to Parliament, in which it proposes a EUR 10 billion loan and guarantee scheme for the energy sector. The purpose of the scheme is to ensure the effective functioning of the electricity market during the crisis.
The proposed central government scheme is a last-resort financing option for companies that are in need of liquid funds to meet energy market’s margin calls. This being the case, the terms and conditions of the loan scheme are strict. The maximum term of loans under the scheme is 2 years.
The lending facility is a precautionary measure by which the government prepares for granting loans. Based on the third supplementary budget, the government’s net borrowing in 2022 can be as high as EUR 18.9 bn, but the borrowing requirement is uncertain as it will depend on the actual take-up of loans under the facility. Harsh terms are likely to limit the use of the lending facility.
State Treasury has updated its website on Borrowing Requirement, indicating that the increased financing needs under the third supplementary budget are foreseen to be covered with short-term funding.
Since 2011, it has been possible for realised borrowing to deviate from that budgeted, given adequate funds to cover expenditure and safeguard sufficient liquidity and a cash buffer.
Read more: Supplementary budget proposal to secure the effective functioning of the electricity market (Ministry of Finance press release, 5 September 2022)