Budget Cuts and Pay Freezes Skip to content

Budget Cuts and Pay Freezes

According to the state budget which will be presented to Althingi parliament in the next few days, the Icelandic state will cut its budget by32 billion ISK (USD 248 million, EUR 204 million).

Minister of Finance Steingrímur J. Sigfússon. Photo: Páll Kjartansson/Iceland Review

The state will seek new revenues for 11 billion (USD 85 million / EUR 70 million), Fréttabladid reports.

The economic situation is much better than estimated by the government, which thought it would need to cut back by 50 billion ISK (USD 388 million / EUR 319 million).

The IMF has reviewed the budget and has not made any significant suggestions. The state budget was running at a 12 percent loss in 2009 and if the budget is not cut, it would mean a 15 percent loss next year.

The state will freeze wages of public workers for one year which will save five billion ISK, according to Fréttabladid. A three year wage freeze as proposed this week by the Minister of Social Affairs, Árni Páll Árnason, will not be executed.

A five percent cut will be made towelfare and 10 percent in other fields.

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