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Disagreement on Future of Bank Investments

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Disagreement on Future of Bank Investments

Minister of Finance Bjarni Benediktsson speaking at the Independence Party general meeting in 2013.

Photo: Geir Ólafsson.

The Icelandic finance minister says he wants his ministry to control the state’s bank investments.

The Minister of Finance wants to close down Icelandic State Financial Investments (ISFI) and move its operations within the Ministry of Finance. The Progressive Party is against the idea, however. The finance minister is leader of the Independence Party, while the Prime Minister leads the coalition and is head of the Progressive Party. Next year’s budget is not expected to include any funding for ISFI.

RÚV reports that ISFI was founded in 2009 to look after state investments in the banks and savings banks—almost all of which took emergency government funding/investment during the financial crisis. These investments make up a large share of total state assets.

ISFI was originally created with a five-year mandate, but its work has already gone on longer than that. Minister of Finance Bjarni Benediktsson has, however, put forward a bill to dismantle ISFI and bring all its investments under direct control of his ministry, as had been the plan in 2009. The 2015 budget bill does not include a single króna to fund ISFI.

Despite this, the bill to close ISFI down has not yet been debated in parliament and sources tell RÚV that party leaders are not in agreement about what to do and are working on a mutually acceptable solution.

The chair of the parliamentary committee on economy and trade wants ISFI to carry on operating. “There is much to recommend now, as there was then when it was created, this arm’s-length approach, that this is a special organization which deals with these matters and manages these shares and where I believe there is professional knowledge of these issues,” says Frosti Sigurjónsson.

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