Athugið þessi frétt er meira en mánaðargömul.

Deficit foreseen for several years

20.08.2020 - 12:12
Bjarni Benediktsson fjármálaráðherra í Kastljósi.
 Mynd: RÚV
The Icelandic State has wriggle room to take the blow of a large budget deficit, according to finance minister Bjarni Benediktsson. There are no plans to raise taxes or make major cuts, he says.

Bjarni was interviewed on RÚV’s Kastljós programme last night and said that the role of the State now is to build on the strong position it starts off from. The country will enter into an investment programme that uses money to invest in infrastructure. “This, I believe, is the best way out of a problem like this,” he said. 

Asked when budget cuts might begin, Bjarni responded that the authorities do not foresee closing the budget deficit in the coming few years. “We are looking at an acceptable debt margin when this ends—that debts will not be too heavy.” 

The ASÍ Confederation of Icelandic Labour has criticised the minister for his remarks saying that he does not support the idea of increasing unemployment benefit levels. He said, however, that the government will look into possibly extending the period during which benefit levels are linked to previous salary. 

Currently, unemployed people can receive up to 70 percent of their previous salary, up to a certain limit, for up to three months before the benefit drops to a standard rate.  

Bjarni also said that the current system of top-up benefits for people on reduced hours during the crisis will likely be extended. The current system is due to expire at the end of this month, at which time employers would need to either give workers more hours or lay them off. The new stronger border controls are likely to impact the tourism industry, which has made the most use of the top-up benefits to date. 

Asked why he does not want to increase benefit levels during a time of high, prolonged unemployment, Bjarni said he has spoken to many employers and “they have given me the message that despite everything it is still hard to get people on benefits to start working.” Low-paid jobs are often not enticing enough to get people to give up their benefits, he said. 

Asked whether he was implying people are lazy, Bjarni said no: “There needs to be an incentive to take the step into the workplace,” adding that this is simply human nature. 

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Alexander Elliott
Project manager