Finance Minister Þórdís Kolbrún Reykfjörð Gylfadóttir plans to propose a bill establishing a national fund, financed with dividends from the operations of Landsvirkjun, Iceland’s National Power Company. The fund would be used to address unexpected challenges in the nation’s economy, such as those that have recently arisen following the geological unrest in Grindavík.
New urgency to old ideas
In an interview with RÚV earlier this week, Sigurður Kári Kristjánsson, former MP and current chairperson of Iceland’s Natural Disaster Insurance, stated that it was necessary for the government to establish a national fund to manage unconventional challenges, such as those facing the town of Grindavík (recent geologic unrest and a volcanic eruption in January have greatly damaged the town’s infrastructure). Such a fund would also be useful for unforeseen challenges related to climate change.
Asked about this issue, Minister of Finance Þórdís Kolbrún Reykfjörð Gylfadóttir told RÚV yesterday that she agreed with this assessment and that she intended to present a bill for a National Fund (Þjóðarsjóður) that would undergo parliamentary processing this year.
As noted by Mbl.is, the idea for such a national fund is not new. Former Finance Minister Bjarni Benediktsson proposed the establishment of a national fund in 2016 and that proposal was also included in the government coalition agreement of the Independence Party, the Left-Green Movement, and the Progressive Party in 2017.
Þórdís Kolbrún herself delivered a speech at the annual meeting of Landsvirkjun, the National Power Company, in February of 2019, where she underscored this commitment to a national fund and explained how it would be financed:
“As you know, there has been discussion for some time about allocating dividends from the operations of Landsvirkjun to a National Fund, which will be used to respond to unexpected challenges in the nation’s economy. A bill regarding the National Fund has now been presented to Parliament, and I wholeheartedly support that we Icelanders show prudence and foresight in this manner.”
As noted by Þórdís Kolbrún, there were plans to present a bill about the national fund during the 2018-2019 parliamentary session, but it did not materialise.
Resolving the treasury’s debt first
Þórdís Kolbrún noted that the fund would not be established until the state’s debt situation following the pandemic improved.
“We have dealt with a pandemic and now natural disasters, which Icelanders have, of course, experienced in the past. This is, nevertheless, an unprecedented situation,” Þórdís Kolbrún told RÚV, again underscoring that the fund would be financed by the profits of energy companies.
“The idea is that these additional revenues from dividends from energy companies would, for example, go into the fund,” Þórdís continued. She observed that the fund was already on the parliamentary agenda and that she would present the bill again so that it could undergo parliamentary processing this year.
(Landsvirkjun, the National Power Company of Iceland, is a state-owned entity that generates between 60-70% of all electricity used in Iceland. The company operates a total of eighteen power stations across Iceland, which include fifteen hydropower stations, three geothermal power stations, and two wind turbines. Landsvirkjun’s financial results for 2022 were exceptionally strong, marking the best financial results in the company’s history. In a recent interview with Mbl.is, Minister of Foreign Affairs Bjarni Benediktsson stated that now was an opportune time to put the strong financial results from Landsvirkjun to good use in the form of a national fund.)