Government targets procurement in push for budget surplus

The 2027 budget proposal presented by Finance and Economic Affairs Minister Daði Már Kristófersson includes a projected five billion surplus, but it still faces parliamentary debate, mbl.is reports. The government’s plans to reduce spending and increase revenues will also have to deliver as expected.

If approved, the surplus would be the first achieved in almost a decade.

Kristófersson said he was hopeful that parliament would support a balanced budget and efforts to put state finances on a sustainable footing. He said the projected surplus provided some room for manoeuvre.

The state plans to save 44 billion through fiscal restraint. Of that amount, four billion would come from general measures, while a reduction in public-sector positions is expected to save three billion. The largest share, 36 billion, is to come from what the government calls targeted spending measures.

Those measures were not explained in detail at the presentation. Kristófersson later said they consisted of many small actions, highlighting improved state procurement as an important area for the Ministry of Finance.

“The state has not made sufficient use of its size in procurement,” he said, adding that some aspects could be improved while others had worked well. He cited recent progress in pharmaceutical purchases.

Improved management and better terms in public procurement have long been priorities for the finance minister. When an efficiency group presented its proposals in March last year, Kristófersson said that achieving annual savings of 2 percent in public procurement could produce 30 billion in savings over five years. This was the group’s largest single proposed measure. Overall, it estimated that 71 billion could be saved during that period.

Efforts to improve state procurement have previously struggled. A working group established in 2014 said the state lacked an overview of annual purchases worth tens of billions. Former Finance Minister Bjarni Benediktsson also repeatedly highlighted procurement in budget presentations, saying that better planning by state institutions could save 2.4 billion a year.

In an interview with mbl.is in 2023, Benediktsson said the main problem was a lack of data available to Ríkiskaup, the state procurement organisation.