Has Covid-19 also become a part of the state budget?

The coronavirus and the Covid-19 pandemic have had a fundamental impact on central government finances in 2020 and in 2021.

The year 2020, in particular, was a year of Covid-19. Commitment to the predefined budget was then rapidly abandoned. The need for central government outlays increased suddenly, while at the same time, a collapse in tax revenue seemed inevitable. In addition to the direct need for money, the state also had to satisfy the need for confidence. Large support and guarantee packages were announced so that business activities and the economy would have a more optimistic outlook on the future. The development of last year’s budget and the magnitude of the changes made to it can be examined in a visualization produced by the NAOF.

Covid-19 has also had an impact on the budget for 2021. To start with, the budget is clearly higher than in the years preceding Covid-19. The direct expenses caused by Covid-19, such as testing and treatment costs, and, for example, the resulting decrease in employment in 2020, did not fall within the central government spending limits. The spending limits aim at long-term financial management and, in essence, restrict the growth of expenditure. However, expenses related to Covid-19 are considered a temporary exception, and these kinds of circumstances are considered to fall outside the spending limits. In the same way as in 2020, the budget for 2021 is highly in deficit, but fortunately the deficit has slightly decreased from the previous year.

In 2021, the need for changing the budget in the middle of the year has been clearly smaller than in 2020. However, Covid-19 has continued to have an impact, and it has been used as an argument for changes made in the supplementary budgets. The new visualization illustrates the appropriations of the first three supplementary budgets for 2021. More appropriations have been allocated particularly to transport infrastructure projects, the capitalization of companies and funds, employment measures, the EU stimulus instrument, and preparing for export credit guarantees. All of these are no longer fully based on Covid-19, and the central government spending limits have been expanded consciously. A Covid-19 provision of EUR 500 million was already made in the original budget, and it has now been raised to EUR 1.85 billion.

The visualization enables you to examine the different additional appropriations and their allocation. It is particularly easy to compare their size with the original appropriation or other central government appropriations. The justifications and the objects of funding are described in greater detail in the budget proposal and the proposals for supplementary budgets.