Stefán Vagn warns 2027 budget surplus could quickly disappear
Thursday 17th September 2026 on 00:30 in
Iceland
Stefán Vagn Stefánsson, chairman of the Progressive Party’s parliamentary group, has warned in an interview with mbl.is that the nearly 5 billion króna surplus forecast in the government’s 2027 budget bill could quickly disappear.
He said the surplus was small in the context of the state’s finances and that only minor changes would be needed to eliminate it.
Stefán Vagn appeared on the Spursmál programme with Grímur Grímsson, a member of parliament for Viðreisn and a member of Alþingi’s budget committee. Stefán Vagn served on the committee until last week, when he became chairman of the Progressive Party’s parliamentary group.
He said there was broad agreement on the goal of a balanced budget, but disagreement over how to achieve it.
According to Stefán Vagn, the government’s proposal seeks to restrain spending by reducing public works, moving projects between years and using accumulated spending authorisations. The other approach was increased taxation.
These were the measures set out in the bill to achieve a surplus of 4.7 billion krónur, he said. The Progressive Party considers that approach misguided.
Another option, Stefán Vagn said, would be to create conditions for stronger economic growth and thereby improve the state’s finances. He said the previous government had sought to support businesses so they could grow, increasing overall economic output and helping the finances move into surplus.
Stefán Vagn also pointed to the market’s response to the budget bill, saying inflation expectations had increased after it was presented. In his view, this suggested the market did not have full confidence that the measures would lead to lower inflation and interest rates.
He also urged caution about celebrating the projected surplus too early. His experience on the budget committee had taught him that there was a significant difference between presenting a bill forecasting a balanced budget and the final state accounts showing an actual surplus after 2027.