New Government Takes Office in Iceland

Prime Minister Jóhanna Sigurdardóttir of the Social Democrats and Finance Minister Steingrímur J. Sigfússon of the Left-Greens presented their continued coalition partnership at a press conference at the Nordic House in Reykjavík yesterday afternoon.

The government offices. Photo by Páll Stefánsson.

The government’s central aim is to rebalance the state budget by 2013 while at the same time implementing an ambitious plan of job creation and innovation to restore Iceland’s position among the most energetic and competitive states in the world by 2020, as stated in a press release from the Ministry for Foreign Affairs.

As reported yesterday, the two parties have agreed to disagree on the EU issue, but both parties emphasize their joint intent that the question be put to the nation, which, in a referendum, will finally determine whether Iceland will join the European Union.

The Minister of Foreign Affairs will present a parliamentary resolution on EU membership during the upcoming summer session. It calls for the Althingi parliament to decide whether Iceland will commence membership negotiations with the EU.

The government is committed to implementing the Economic Recovery Program agreed upon with the International Monetary Fund (IMF) and will continue its close cooperation and consultation with the IMF, aimed at restoring the economy and rebuilding trust in international financial markets.

Long-term goals include:

– A national consensus will be sought for a stability pact, and a plan presented for achieving fiscal balance in coming years.

– The number of ministries will be reduced from 12 to nine during the government’s term in office.

– A comprehensive assessment will be made of the need for further actions to assist households and proposals drafted in consultation with social partners.

– Corporate debt adjustment and restructuring will be expedited.

– Ten specific urgent employment measures will be presented.

– An action plan to boost industry and improve the quality of life will be prepared for all regions of Iceland.

– An overall revision of the Act on Fisheries Management will be carried out, in accordance with the coalition parties’ platforms.

– A special constitutional congress will be elected in tandem with upcoming local government elections.

The government has drafted an agenda for the next 100 days, listing the urgent measures that need to be taken to tackle the difficult economic situation, for the benefit of households and businesses.

These include measures to finalize the recapitalization and restructuring of the banking system, negotiations with foreign creditors and governments, legislative proposals introducing democratic reform, finalization of medium-term fiscal policy and increased efforts in job creation to fight unemployment.

Eight of the ten cabinet ministers of the minority government will continue in office. The two non-political ministers will remain in the cabinet. Four new ministers have been appointed, two from each party, although this will not mean any transfer of ministries between the parties, as some ministers formerly held more than one post in the minority government.

The ministries are allocated as follows: