A government task force has presented 60 cost-cutting recommendations, potentially saving at least ISK 70 billion [$514 million / €478 million]. The government will now assess these proposals, with ministries incorporating selected measures into the next fiscal policy.
Consultation portal flooded with suggestions
In January, PM Kristrún Frostadóttir’s coalition requested suggestions from the public on how best to streamline government spending. The call prompted a strong response: the government’s online consultation portal was almost immediately flooded with suggestions.
According to Vísir, a total of 4,000 comments were submitted, amounting to over 10,000 proposals.
At the end of January, the Prime Minister appointed a task force to review the proposals, which was to be assisted by AI in its work.
Yesterday, the task force presented its findings at a press conference, delivering 60 cost-cutting recommendations.
Savings amounting to ISK 70 billion
As reported by Vísir, if fully implemented, these measures could result in savings of at least ISK 70 billion [$514 million / €478 million] by 2030. The actual savings could be even higher, as not all proposals were fully assessed for budget impact within the limited timeframe.
The task force categorised its recommendations into three areas: consolidations and shared operations, general efficiency measures, and regulatory improvements.
Among the proposed consolidations is the merging of police districts, district courts, and universities. Additionally, the Social Insurance Administration (Tryggingastofnun) and Iceland Health (Sjúkratryggingar) would be combined into a single entity. Smaller government agencies and various museums would also be merged.
In terms of general cost-cutting, the task force suggests reassessing state funding for political parties, eliminating discretionary funds for ministers, reducing the number of Supreme Court justices to five, abolishing special retirement benefits for justices, dissolving competency committees in healthcare services, and shutting down the Kría Investment Fund.
Regarding regulatory improvements, proposals include reducing excessive regulatory requirements (gold-plating), easing equal pay certification rules, allowing anonymous job applications for public sector positions, and repealing outdated legislation on housewives’ leave entitlements.
Prime Minister: savings already underway
Speaking to Vísir, Prime Minister Kristrún Frostadóttir stated that she had already decided to eliminate the special allowances tied to presidential powers. She also highlighted other upcoming initiatives, such as introducing a fiscal stability rule, which would require recurring expenditures to be backed by stable revenue sources.
“We have already started reducing administrative overhead, particularly by cutting the number of government committees, and we plan to implement a fiscal stability rule. We are also looking into merging state funds and pursuing larger long-term projects, such as optimising public procurement spending. Additionally, I believe the proposal to consolidate police districts, particularly in the southwest region, is worth serious consideration,” Kristrún remarked.
Yesterday, the government approved that a dedicated working group, comprising representatives from the Prime Minister’s Office and the Ministry of Finance, will continue to assess the proposals. Ministries will then incorporate these findings into the next financial plan for 2026-2030.
“This process will take time. I want to emphasise that these are recommendations to the government. Each minister will need to evaluate them in collaboration with their respective institutions. Ultimately, it will be a political decision as to which proposals are implemented,” Kristrún concluded.
