Looks like the deficit will be 17 billion more

The Ministry of Finance and Economy expects that the total income of the Treasury will be about 20.7 billion ISK less next year than was assumed when the budget proposal for the year 2025 was submitted. Total expenditures, however, fall by 3.1 billion from the bill's estimate in a reassessment presented by the ministry to the Alþingi's government budget committee.

It now looks like the deficit in the treasury will be 58.6 billion next year, but it was estimated that the deficit would be 41 billion when the bill was presented.

The Ministry's reassessment of the Treasury's performance next year is based, among other things, on the updated economic forecast. Due to the decreasing economic activity, it is now calculated that income from value-added tax will be ISK 12.5 billion less than expected.

Njáll Trausti Friðbertsson, chairman of the budget committee, says about the reassessment of the ministry, which was presented in the budget committee yesterday, that if you look at the big picture in the state finances, there are no major changes in the outlook for the next year in terms of the austerity and other goals in the state finances.

"Income is decreasing as activity is decreasing in society and it is slowing down," he says, "but we are optimistically looking forward to achieving this soft landing with falling interest rates and decreasing inflation that has been aimed for," Friðbertsson says.

On the expenditure side, there are i.a. expected new and increased projects for ISK 8.6 billion, which are proposed to be implemented in 2025. They are met with a corresponding reduction in the general reserve fund of the same amount.

It looks like the state treasury's debt will be 32.5% of the gross domestic product at the end of next year, but it was assumed that the ratio would be 31.4% in the draft budget.