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Icelandic Towns in the Black

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Icelandic Towns in the Black

Reykjavík City Hall.

Reykjavík City Hall will release its figures on Thursday. Photo: Páll Stefánsson.

The biggest municipalities in Iceland returned healthier accounts for 2016 than expected.

The head of the Association of Icelandic Municipalities says that last year’s financial results were actually the best in 10-15 years, but goes on to warn of some expensive investments expected in the next few years.

Hafnarfjörður ran with a ISK 500 million (EUR 4.3/USD 4.6 million) surplus in 2016, which was ISK 180 million more than expected. Garðabær ran with a ISK 800 million surplus, which was ISK 500 million more than planned. Kópavogur was ISK 1.2 billion in the black—four-times more than expected.

Ísafjörður was positive by ISK 180 million, when only 18 million was expected. Dalvík returned twice as much as planned: around ISK 250 million.

Akureyri, meanwhile ran at a ISK 80 million deficit—but it had expected the figure to be closer to ISK 680 million.

Reykjavík will release its 2016 figures on Thursday.

But what is the reason for the municipalities’ good fortune, Vísir asks.

The general increase in people’s wages across Iceland has meant higher local authority tax. And the low rate of inflation has helped preserve the value of that extra income.

Sigurður Ármann Snævarr, of the Association of Icelandic Municipalities, says that another reason is the success of wide-ranging money saving measures at local councils, many of which were pushed deep into the red by the financial crisis nearly a decade ago.

He warns, however, that the good news is also partly because councils’ investment in things like new infrastructure has been at an historic low for the past two or three years, which he says will have to reverse and become expensive over the coming years.

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