Finland's new government cuts development aid by 43 %

- Development NGOs are challenging the government’s decision

The new centre-right government of Finland has decided to reduce the budget for development co-operation by 43 %. The cuts will start already this year by no more directing income from emission allowance auctions to development cooperation. This amount is estimated to be some 70 million euros. The big cut of 300 million euros would be done in the 2016 budget. These two combined would mean a cut of 43 percent compared to 2014. The funds available for helping the world’s poor were then 870 million euros.

The decision by the three parties forming the government - Centre Party, Finns Party and Coalition Party - is a huge turn-around in the Finnish foreign policy where international solidarity has been one of the core elements. Moreover, the speed by which the cuts will be implemented will put the aid administration in a chaos. The ministry’s leadership has indicated that these cuts will force them to evoke even the small print in the existing contracts that enable the cancellation of multi-year agreements.

Finnish civil society organisations see that the cuts should be reduced and phased in gradually. That way Finland could honour its commitments and provide continuity to the good work done by the NGOs. If the budget for 2016 will only be the indicated 500 million euros, most partners and agencies without a multi-year programme agreement will be left empty handed, because earlier commitments amount nearly to the same figure.

The worst consequences of the cuts will be felt by poor people in Africa, Asia and Latin America that have received concrete and useful support from Finland to improve their livelihoods, rights and environment. It is a shame how the inability of the government to balance the budget in better ways will now dramatically hurt millions of people. For example, by cutting environmentally harmful subsidies and ending tax evasion (estimated at 1.000 billion euro in the EU alone), much of the budget could have been balanced in a responsible and fair way.

The aid cuts were not very clearly spelled out in the government programme that was announced during the last week of May. Therefore, there is a possibility for the three parties to reconsider the indicated volume and timing of the cuts when preparing for the expenditure framework for the next few years. However, such will only happen if all those who find the indicated cuts unacceptable will make this known to the party leaders and to the public at large.
 

16 June 2015: Update on the budget numbers

On 15 June 2015, the Ministry for Foreign Affairs informed about the budget plans for 2016 in a press statement. According to the Ministry, in 2014 the official development assistance was 1.200 million euros. Next year it is expected to drop to 744 million euros, a cut of 456 million, or -38 %.

The official development assistance figure used by the Ministry includes also other budget lines than the actual development cooperation that are fully or partially considered to be part of the official development assistance, for example a slice of EU membership fee that goes to foreign aid. In my blog text I have discussed only the actual development cooperation budget line. In actual cooperation the cut will be 300 million euros, but some 100 million will be added for a loan facility. No estimate or clear timing is given for discontinuing the use of emission allowance auction incomes for actual development cooperation. In the Finnish statement the timing is "after 2016", in English "no longer". My estimate is that this means a cut of some 70-100 million euros in 2016.

Further update at 2 pm 0n 16 June:

When pointed to the discrepancy in the timing of emission allowance auction incomes the Ministry changed the Finnish text to "from 2016". So the cut will be there from next year, probably already from this year.

Marko Ulvila
Chairperson

Siemenpuu Foundation