2023 Budget Bill Projects Decreased Deficit Skip to content

2023 Budget Bill Projects Decreased Deficit

By Yelena

Prime Minister Bjarni Benediktsson
Photo: Golli. Bjarni Benediktsson.

The Icelandic government’s budget bill for 2023 will run on a deficit of ISK 89 billion [$640 million; €632 million], a significant decrease from last year’s deficit of ISK 169 billion [$1.215 billion; €1.199 billion]. Finance Minister Bjarni Benediktsson presented the budget bill at a press conference today, saying that state finances were heading “all in the right direction.” The bill will be introduced in Alþingi tomorrow.

Despite running a deficit, the treasury’s debt ratio is decreasing, something Bjarni stated was very important. Treasury revenues are expected to surpass ISK 1,000 billion [$7.2 billion; €7.1 billion] in 2023.

Iceland’s economic outlook among the best in Europe

The Finance Minister stated that the treasury would be utilised to curb inflation, which is now 9.7% and rose to 9.9% last month, the highest inflation in more than a decade. In the international context, however, inflation in Iceland is the second lowest in Europe, and the impact of rising energy prices has been limited in Iceland, as the percentage of renewable energy is much higher. Prosperous fishing and tourism industries have also helped Iceland’s economy remain more stable than that of many of its neighbours.

Measures to help first-time homebuyers

The budget includes measures to help those entering the real estate market by making more groups eligible for discounts and support measures granted to first-time buyers. It also includes increases in disability pensions and housing benefits.

Taxes on vehicles and excise duties on the import of new cars will be increased in the coming year. The budget mentions that one of the biggest challenges for the government’s treasury will be a comprehensive restructuring of vehicle and fuel taxation. Iceland funds road and transport infrastructure largely through taxes imposed on gasoline, and that revenue will continue to decrease as electric and fuel-efficient cars outstrip vehicles that run on gasoline.

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