Joint funding system of municipalities

The Municipal Guarantee Board (MGB) is a public law body established by the MGB Act (487/1996). MGB together with the Municipality Finance Plc (MuniFin) comprise the joint funding system of municipalities in Finland.

MGB’s purpose under the law is to safeguard and develop the joint funding of Finnish municipalities. In order to fulfil its purpose, MGB can grant guarantees for such funding of MuniFin which will be used in accordance with MGB Act for lending purposes. A significant portion of MuniFin’s lending is used for projects such as building hospitals, healthcare centres, schools, day care centres, social housing, land use planning and infrastructure as roads and water supply and social housing. MuniFin is the only credit institution that meets the criteria set out in the Act.

The MGB Act sets out the terms and conditions as well as the specific requirements for the permissible use of the funds raised by MuniFin with the support of the MGB’s guarantee. The joint funding system of Finnish municipalities was established and is operated under the terms and conditions of the MGB Act. The MGB Act is in compliance with the European Community State aid rules (European Commission Decision 16.6.2004, C(2004) 2034).

All Finnish mainland municipalities, representing 100 % of the population of mainland Finland, are permanent MGB members. Due to the autonomy of Province of Åland, its municipalities are not members of MGB and clients of MuniFin.

Municipalities are jointly responsible for the funding such expenses and commitments of MGB that cannot be otherwise covered, in proportion to their population figures at the preceding year-end as referred to in the Population Data Act (661/2009, as amended) (section 10).

MGB has a right to inject capital into MuniFin if needed.

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