Iceland details defence spending as it targets 1.5% of GDP
Monday 19th October 2026 on 19:01 in
Iceland
Iceland’s foreign and finance ministries have published a breakdown of defence-related spending, saying their calculations suggest the country may already be close to its commitment to spend 1.5% of GDP on defence. The figures were detailed in a memorandum sent to Alþingi’s budget committee on Friday, mbl.is reported.
Morgunblaðið reported in June that the government estimated the state, municipalities and public companies would spend a combined 48.9 billion krónur on defence and security this year, equivalent to 0.92% of GDP. Spending was projected to rise to 52.7 billion krónur by 2030, or 1% of GDP.
The new memorandum puts this year’s total at 42.4 billion krónur in the A1 section of the state budget and 6.5 billion krónur across public companies and municipalities. It divides A1 spending among 13 categories.
The largest A1 allocations are 10.8 billion krónur for cooperation on security and defence, 10.1 billion for policing, 8.4 billion for transport, 7.3 billion for territorial waters and 1.7 billion for specialised hospital services. Other categories receive between 0.1 billion and 0.7 billion krónur. These include 0.4 billion for mandatory contributions to international cooperation, 0.4 billion for research and monitoring of Iceland’s natural environment, and 0.7 billion for media.
The ministries’ projections for the next five years show spending remaining unchanged in many categories. The largest increase is projected in cooperation on security and defence, from 10.8 billion krónur this year to 15.1 billion in 2031.
The memorandum says the estimates draw on a preliminary assessment by the foreign ministry, developed with the finance ministry, of state spending that could meet NATO’s definition of defence-related expenditure. It says the ministries used cautious estimates of each budget item to ensure that the spending is genuinely defence-related and supports resilience.
Of the 6.5 billion krónur assigned to public companies and municipalities in 2026, 1.5 billion is classified under A3, 3.5 billion under C, and 1.5 billion is attributed to municipalities. A3 spending is mainly for operating, maintaining and developing telecommunications systems for emergency and security communications. These projects are largely handled by Korda, a public limited company formed through the merger of Farice, Öryggisfjarskipti and the technical division of Neyðarlínan.