Finance Minister: Iceland facing last hurdle on road to recovery

kronur3According to Iceland’s Minister for Finance, Steingrimur J. Sigfusson, further economic tightening in next year’s national budget is the last hurdle on the road to economic recovery and the outlook is already improving, he says.

The Icelandic government needs to correct its balance sheet to the tune of a further ISK 40 billion (ISK 306.2 million) and this lower-than-expected figure means next year’s cutbacks and tax hikes will be the last stage in the country’s recovery, the FinMin told RUV.

Cutbacks will save ISK 32 billion through the merging of ministries and directorates, among other things. New taxes will net the rest through ‘wealth tax’ and more people being in jobs.

The budgetary imbalance is lower than had been predicted and Sigfusson put this down to a smaller than expected contraction in GDP and lower than expected inflation in government spending. The IMF has not proposed any major changes to Sigfusson’s proposed budget, which is less severe than had been feared.

Meanwhile, Statistics Iceland yesterday confirmed that the rate of unemployment is down for the second month in a row. Many more men have been finding new jobs than women; but more men are unemployed in the first place. May figures show eight percent unemployment among women and nine percent among men. Men have been worse affected because of the severe recession in ‘physical’ industries, including construction.