Finance Minister pushes to reduce soaring capital expenses

Daði Már Kristófersson, Minister of Finance and Economic Affairs, says that the newly announced draft budget is confirmation of how firmly the government is working to ensure economic stability and support the Central Bank in bringing down inflation and interest rates.

Everything will be done to reduce capital costs, which are the fifth-largest expenditure in the state budget.

Kristófersson made these remarks in an interview with mbl.is following the presentation of the 2026 budget bill.

A “restrained” bill to support inflation targets

A press conference was held at the Ministry of Finance and Economic Affairs, where Kristófersson outlined the main points of the upcoming budget bill.

He said the bill was restrained because the state treasury must support the Central Bank in reaching its inflation target.

The state treasury is projected to run a 15 billion ISK deficit next year, compared to the 26 billion ISK deficit previously forecast. The goal is to achieve a balanced budget by 2027.

Efficiency measures and reforms are expected to deliver 13 billion ISK in savings, which Daði attributes to the government’s streamlining actions announced last spring. He noted that these measures have been more successful than anticipated.

Closing in on a balanced budget

Where is the bulk of these savings coming from?

“They’re spread widely across the system. In the lead-up to the budget, each ministry presented the progress of its work, and all of this information is now online. I think it would be unfair for me to single out any one area,” Kristófersson said.

When asked what he was most pleased about, he pointed to how close Iceland is to eliminating the deficit entirely:

“I’m very optimistic that next year’s budget bill will show black numbers, not red ones — on the right side of zero.”

What could have gone better?

“That’s a tough question,” he admitted. “What frustrates me most is that 125 billion ISK goes toward capital costs, and I will do everything I can to bring that number down.”