HELSINKI (Bloomberg) -- Finland will provide loans to exporters struggling to gain financing after banks curtailed lending as global turmoil showed the first signs of hurting the Nordic nation’s economy.

“There is a threat of export projects that are important for Finland being canceled or postponed due to banks’ liquidity problems,” Economy Minister Mauri Pekkarinen said in an e-mailed statement on Tuesday.
The government set aside 1.2 billion euros (1.5 billion dollars) for Suomen Vientiluotto Oy, a government-owned export credit provider, to channel funds to export projects. The lending program will last until 2010, the government said.
The 15-month-old global financial crisis has led to a freeze in liquidity as mistrust among banks crimps lending worldwide. That pushed the euro area into its first recession since the 1999 introduction of the single currency in the third quarter. Finland, the only Nordic nation in the euro region, hasn’t had to step in to help its banks yet.
Finland’s economy will expand 0.5 percent next year, the Helsinki-based government said in an e-mailed statement on Tuesday. That compares with its Aug. 27 forecast of 1.8 percent. The economy will expand 2.5 percent this year, it added.
----------- World demand
“Exports are estimated to contract as international demand wanes,” the government said.
A drop in global demand is hurting exporters, such as Stora Enso Oyj and UPM-Kymmene Oyj, Europe’s two biggest papermakers that have shuttered mills and cut more than 1,700 jobs in Finland this year alone. The forest industry’s sales abroad fell an annual 16 percent in August, Finnish Customs said on Nov. 3.
“Some laws will have to be changed” to support the exporters, the government said Tuesday. Exports account for about a third of the 246 billion dollars economy.
Startups and other fast growing companies have also had problems securing capital and 80 million euros will be set aside for loans to them, the government said.
Finland’s parliament on Tuesday called on the government to change its proposal on a maximum of 50 billion euros’ emergency interbank lending guarantees to give the state more power over possible distressed lenders.