Daði: “Pressure lifted from households”

Iceland’s government says it has finally brought state revenues and spending into balance, ending an eight-year run of budget deficits. Finance and Economic Affairs Minister Daði Már Kristófersson presented next year’s budget at a news conference and described the result as a significant day for the government.

Daði credited the leaders of the governing parties for their cooperation, as well as the government as a whole. He said the rising cost of servicing state debt underscored the importance of avoiding a deficit. A balanced budget, he argued, had now been brought together and placed on schedule.

The government plans to tighten spending further. State spending grew by about 1% a year on average from 2023 to 2026. The government had projected a 0.5% spending contraction for 2027 in its fiscal plan, but the budget now estimates a 1.1% reduction.

Despite the balanced budget, the government says it will continue strengthening healthcare, education and selected basic systems that support groups facing difficulty. It also plans several construction and other projects. Daði stressed that fiscal restraint must exceed the burden created by new charges.

He also highlighted the need to protect gains in purchasing power, noting that wages in Iceland had risen faster than prices. “Pressure has been lifted from households,” he said, describing the balanced budget as the result of discipline in government operations and better use of public funds. He called the occasion historic and joked that the presence of the government’s three female leaders made the finance ministry’s news conference less gloomy than usual.

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Pressure has been lifted from households.