News

Over ISK 6 billion in additional investment and growth sectors in 2013

11/20/12

Funding for the 2013-2015 Investment Programme, submitted this spring with a reservation on the availability of funding, has now been secured.

The Minister of Finance and Economic Affairs and the deputy leaders of the coalition parties recently presented a slate of projects totalling some ISK 6 billion, which will receive additional budget allocations to create jobs and stimulate investment in expanding industrial sectors.

These new projects are in addition to funding for improvements to transport infrastructure, innovation and research funds, and regional development initiatives in the Investment Programme already included in the budget currently before parliament and financed with revenues from fishing fees. A total of over ISK 10 billion, therefore, will be devoted to investment projects in 2013 as laid out in the government's Investment Programme for Iceland.

The objective is to boost investment and job creation, which in turn will positively impact growth and the Treasury's revenue base.

Funding for the Investment Programme will come from two sources. Firstly, there is funding for transport infrastructure projects and R&D generated by fishing fees, which was added to the existing transport programme approved last June. Funds for research were increased in the budget presented this autumn. Secondly, projects involving support for growth sectors and building construction will be funded with dividends and sale of assets.

Two main deviations have been made to the programme since it was presented last spring. In the first place, no conclusion has yet been reached on acceleration of maintenance work directed by State Real Estate (Icel. Fasteignir ríkisins). Secondly, funding by the Housing Financing Fund (HFF) for rental housing is not expected by itself to require an equity contribution at this stage. HFF's situation and need for more equity is the object of a special examination and will be considered in the context of expanding the supply of rental housing.

Contributions to projects included in the 2013 Investment Programme (mISK)

Projects funded by fishing fees and rental income as provided for in the 2013 budget     4,200
Transportation infrastructure, increase   2,500  
Research and Technology Development Fund, increase   1,300  
*Regional Development Initiatives   400  
       
New projects financed with dividends as of the 2nd budget reading     6,130
Real estate   3,430  
Prison 1,000    
Icelandic studies building 800    
Ferry Herjólfur/Landeyjahöfn 640    
Natural history museum/exhibition 500    
Knowledge centre at Kirkjubæjarklaustur 290    
Protected buildings and structures 200    
The green economy   1,030  
Green Investment Fund, new 500    
Green economy and greening of business, new 280    
Green steps and ecofriendly purchasing, new 150    
Green investments, new 50    
Energy conversion of vessels, new 50    
Creative enterprise   920  
Icelandic Film Fund, increase 470    
Project fund for creative endeavour, new 250    
Internetland Iceland, increase 200    
Travel industry   750  
Development of tourist destinations, increase 500    
Infrastructure of protected areas, new 250    
       
Total     10,330

* The Investment Programme anticipated that contributions to Regional Development Initiatives would be funded by rental income from harvest rights through the quota market (Icel. Kvótaþing), however the Bill amending the fisheries management system has not been adopted by the Althing. Nonetheless, one of the government's emphases in the budget is ISK 0.4 billion to be devoted to Regional Development Initiatives.
An account has already been provided of that part of the Investment Programme which is funded by fishing fees.

According to the Budget Bill, ISK 4.2 billion of these fees will be used for transport infrastructure, research and innovation and Regional Development Initiatives.

The 2013-2015 Investment Programme is part of a new advance, following the economic collapse, which is aimed at reinforcing the economic recovery and growth. The Programme is based upon the assumption that, given the current economic situation, it is advisable to devote a considerable portion of the funding which has been tied up in banks, together with part of the resource fees, towards organised and focused investment in infrastructure to the public benefit. This will strengthen the foundation for growth and expand the Treasury's revenue base in the long term.
Preparation of the Investment Programme and the prioritisation of projects it reflects was grounded on the government's previous strategic planning for Treasury finances and economic affairs and Ísland 2020.

3-year Investment Programme

Item Total 2013-2015 2013 2014 2015
Funded by dividends and sale of assets 18,850 6,130 6,710 6,010
Total support for growth sectors 8,540 2,700 3,120 2,720
Travel industry 2,250 750 750 750
Development of tourist destinations 1,500 500 500 500
Infrastructure of protected areas 750 250 250 250
Creative enterprise 2,760 920 920 920
Icelandic Film Fund 1,410 470 470 470
Project fund for creative endeavour 750 250 250 250
Internetland Iceland 600 200 200 200
The green economy 3,530 1,030 1,450 1,050
Green investments 150 50 50 50
Green investment fund 1,000 500 500  
Greening of business 1,280 280 500 500
Green steps and ecofriendly purchasing 600 150 200 250
Energy conversion of vessels 500 50 200 250
Real estate 10,310 3,430 3,590 3,290
Prison 2,500 1,000 1,000 500
Ferry Herjólfur/Landeyjahöfn 2,140 640 1,300 200
School of Education building 1,300     1,300
Icelandic studies building 2,400 800 800 800
Natural history museum 500 500 0 0
Protected buildings and structures 600 200 200 200
Knowledge centre at Kirkjubæjarklaustur 870 290 290 290

3-year Investment Programme funded by fishing fees

3-year Investment Programme funded by fishing fees

Item 2013-2015 2013 2014 2015
15,600 4,200 5,700 5,700
Transport, acceleration 7,500 2,500 2,500 2,500
Research and innovation 5,300 1,300 2,000 2,000
Regional Development Initiatives 2,800 400 1,200 1,200