Five-Year Budget Approved Skip to content

Five-Year Budget Approved

Hospitals, helicopters, and infrastructure are the focus of the government budget for the next five years, RÚV reports.

The budget was presented in a press conference yesterday. It allocates ISK 75 billion (USD 758 million/EUR 617 million) to healthcare spending, most of which will go toward construction of a new National Hospital on Hringbraut street in Reykjavík. Funds are also allocated for the purchase of helicopters for the Icelandic Association for Search and Rescue, as well as construction of a nursing home and a new building for the University of Iceland.

Prime Minister Katrín Jakobsdóttir says slowing economic growth in Iceland presents an opportunity to invest in infrastructure. “We can say we are looking forward to a better period for infrastructure development than any party promised before the last election,” she stated when introducing the bill. She added that great efforts in transportation will be made in 2019, 2020, and 2021. The budget also includes a plan to connect 99 percent of Icelandic households to the fibreoptic broadband network by 2020, which Katrín called a “magnificent achievement.”

The budget assumes the treasury will amount to ISK 338 billion during the period. Investments will increase by ISK 13 billion next year, reaching a peak in 2021. Treasury debt, on the other hand, has been reduced by ISK 600 billion since 2013.

The budget estimates a one percent lowering of income tax over the next five years. It will also explore ways of instituting a “tourist tax” starting in 2020. The press release also mentions plans to improve the benefits of disability pensioners, as well as extending parental leave and raising benefits for new parents.

Last month opposition MPs criticized the government for delaying the budget bill, which, according to law, must be submitted by 1 April. The budget has since been approved by parliament. Minister of Finance Bjarni Benediktsson stated implementation of the new budget will begin this autumn.

Social Democratic Alliance Chairperson Logi Einarsson and Centre Party MP Birgir Þórarinsson were on the budget committee. Birgir lamented the fact MPs had little time to study the budget bill, adding the funds allocated toward transportation will not go far. Both criticized the budget for a lack of increase in pensions. Logi stated the budget shows the government’s right-leaning policy, which “is beneficial to high-earning workers and capital owners at the expense of middle-income and low-income people.” He criticized the reductions in housing support and lack of funding for education.

Reform Party Chairperson Þorsteinn Víglundsson said the budget was “completely unrealistic,” while People’s Party Chairperson Inga Sæland said it does nothing to support those most in need.

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