Minister cuts investment allocations but keeps major projects on schedule

Finance and Economic Affairs Minister Daði Már Kristófersson says investment allocations for new construction will be reduced next year, but the changes will not delay major projects, mbl.is reports. These include Þjóðarhöll, the New Landspítali hospital, a new prison and other projects.

Daði presented the 2027 budget bill on Monday. It forecasts a surplus of five billion Icelandic krónur. The budget includes 44 billion krónur in spending restraint and 22.6 billion krónur in new revenue. Icelandic state budgets have not been deficit-free since 2019.

Asked whether any major projects would be postponed, Daði answered no.

“Investment allocations are being reduced, but all of them are being reduced in consultation with the project developers. None of these changes will delay any projects,” he said.

Daði said investment allocations had not been fully used in recent years because project developers had not managed to build for the amounts allocated. This had created uncertainty in the state’s financing, he said, and the government had been trying to address the issue.

He also said development of the government quarter was not included in the next five-year plan. The quarter is the area where most ministries are housed, along with undeveloped plots, extending from the National Theatre to Skúlagata and between Klapparstígur and Ingólfsstræti.

“The current situation does not call for investment there,” Daði said, adding that it could still be sensible to keep government institutions in one place for greater efficiency.

He said no decisions had been made on new development in the quarter and suggested that any such project was likely to be further away than a 10- to 15-year plan. The government is discussing with the city whether to reduce the boundaries of the quarter to create space for other services. If that happens, the state would only participate in developing buildings intended for state use, he said.