Reykjavík City Loses ISK 71.5 Billion Skip to content

Reykjavík City Loses ISK 71.5 Billion

The losses of the City of Reykjavík and its subsidiaries in 2008 amount to ISK 71.5 billion (USD 582 million, EUR 409 million), as announced this week. However, the regular operations of the city returned ISK 2.3 billion (USD 19 million, EUR 13 million) in profits in 2008.

Reykjavík City Hall. Photo by Páll Stefánsson.

The extensive loss had been expected and can primarily be explained with a vast currency loss due to the debts of Reykjavík Energy (OR), which totaled ISK 93 billion (USD 757 million, EUR 532 million), Morgunbladid reports.

“What we are very satisfied with is that during these times the regular operations of the city deliver a 2.3 billion surplus and that is incredibly important to us under these circumstances,” said Mayor of Reykjavík Hanna Birna Kristjánsdóttir.

The mayor stated that this conclusion bears witness to the strength of the city’s financial management, whose employees and executives undertook various actions to reduce expenses in mid-2008.

Kristjánsdóttir added that the foreign revenue of OR is sufficient to cover its foreign payments and that domestic operations are delivering profits.

Dagur B. Eggertsson, Reykjavík City councilmember for the Social Democrats, pointed out that the outcome of the city’s annual accounts is an Icelandic record in running at a loss.

It is obvious that the operations of the city’s companies are in an extremely tight spot, Eggertsson stated.

Furthermore, Eggertsson claimed that the full impact of the banking collapse cannot yet be felt in the annual accounts since the influence of unemployment, higher costs in welfare and reduction in tax revenue is still to come.

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