Aug 31, 2020

Danish Government Presents 2021 ‘Corona State Budget Proposal’

On August 31, Finance Minister Nicolai Wammen presented the key elements in the government’s 2021 budget proposal, which he coined a ‘Corona State Budget’ on a press conference earlier today. The proposal will be negotiated during the Fall (October) and must be voted through before December 31st, 2020 by a majority of the Danish Parliament.

The government’s proposal is highly focused on the economic recovery following the corona pandemic as well as strengthening Danish health authorities’ capabilities to handle future health crises. During the press conference, Minister Wammen underlined that the government has budgeted a financial deficit of 0,5 percent of Danish GDP in 2021. This is the maximum level of deficit that a government is allowed to operate with according to the State Budget Law.

A few key points of the 2021 budget proposals are:

  • ‘Corona War Chest’: The government will establish a ‘Corona Finance Reserve’ aimed at kickstarting the Danish economy and tacking specific challenges following covid-19 (DKK 9,2 bn. in 2021)
  • Strengthening Danish health authorities in case of health crises
    The new Danish Agency for Supply Security (DKK 70 mio. annually from 2021), a new department in the Ministry of Health & the Elderly (DKK 13,3 mio. annually from 2021), strengthening of a task force in Danish Health Authority/Sundhedsstyrelsen (DKK 18,5 mio. annually in 2021 and 2022) and strengthening the Danish Patient Safety Authority (DKK 12 mio. annually in 2021 and 2022)
  • Additional Health Initiatives: Management of he National Bio Bank is continued (DKK 13 mio. annually in 2021 and 2022)
  • A New ‘Children Initiative’: This Fall, the government will present a new ‘Child Initiative’; DKK 150 mio. (2021), DKK 250 mio. (2022) and DKK 500 mio. annually (2023 and 2024)
  • Elder Care: DKK 200 mio. are allocated to strengthen the elder care (2021 and 2022)
  • Multi-annual Agreement with the Tax Authorities: The government proposes a multi-annual agreement with the Danish Tax authorities to secure framework conditions from 2022 and onwards. The agreement includes improved managed of IT development projects, a prioritization of tasks and activities in tax agencies. Ahead of the agreement, the government appoints a committee of external experts as well as an independent Tax IT Inspectorate with external members
  • The Danish Police: The government aims to establish 20 new local police units, educate 150 additional local police officers and establish a new national investigation unit
  • Nature & Bio Diversity: DKK 50 mio. are allocated annually (2021-2024) to nature and bio diversity
  • Climate Initiatives: DKK 10,5 mio. are allocated to continue State of Green (2021-2024). In addition, DKK 3,1 mio. are allocated to continue ‘Tænk Kemi’ under the Consumer Council in 2021
  • Green Research: The government will propose the initiative at a later stage but it is their ambition to increase funding to green research. In addition, the government sustains the public research budget at 1 percent of GDP.
  • The Danish Foreign Service: The Foreign Service will be allocated DKK 62,7 mio. (2021), which is equal to the planned budget cuts set for 2020 and 2021. In addition, the Ministry of Foreign Affairs is allocated DKK 5 mio. annually (2021 and 2022) to tackle the additional tasks arising from the covid-19 pandemic
  • Greenland & the Faroe Islands: Denmark will overtake Greenland Climate Network from NASA (DKK 9,5 mio. annually in 2021 and 2022)
    Foreign Aid: The government allocates 0,7 percent of GDP to development and foreign aid. This is a decrease of DKK 445,1 mio. from 2020
  • Negotiation Reserve: The government sets aside DKK 1,5 bn. annually (2021-2024) for budget negotiations. These funds are aimed at financing welfare, green initiatives and media agreement incl. the planned budget cuts at the Danish Broadcasting Corporation.

The government will finance the 2021 state budget primarily by increasing the budget deficit to the maximum level. In addition, the government has annulled the broadband fund (bredbåndspuljen), which was aimed at establishing high-speed internet in low-populated areas (DKK 100 mio.).

Sources: regeringen.dk, Altinget, tv2.dk