Icelandic government increases expenses by over 24 billion ISK in supplementary budget amendments

The Icelandic government is set to increase expenses by more than 24 billion ISK this year, as proposed in supplementary budget amendments from the majority of the parliamentary finance committee. The rise in interest payments plays a significant role in this financial adjustment.

This is the fifth set of supplementary budgets to be submitted to the Parliament this year, a process initiated to accommodate unplanned government expenditures. Expenses this year have stemmed from various sources, including the volcanic eruptions in the Reykjanes Peninsula and government involvement in public sector wage negotiations.

The latest supplementary budget outlines additional government spending that includes nearly three billion for winter maintenance of road infrastructure, 1.5 billion to support Ukraine, and 900 million to reimburse film production costs. The Coast Guard will receive an additional 460 million for repairs on aircraft engines, while close to half a billion will be allocated for the upcoming parliamentary elections. Initially, the Coast Guard was to receive 350 million, but the finance committee’s majority recommends increasing this by 110 million.

Furthermore, government borrowing authority will be raised by 20 billion ISK in response to delays in selling the state’s stake in Íslandsbanki. The majority of the finance committee also proposes an increase of 800 million ISK for disability and rehabilitation pension benefits to fund a tax-free one-time payment in December. The biggest single expense is attributed to rising interest payments, which will increase by 14.5 billion ISK.

A new discussion on the supplementary budget is set to commence in Parliament today. Although there were plans to conclude parliamentary work by the end of this week due to the upcoming elections, this timeline may be extended as work on next year’s budget remains unfinished.