Fjarðabyggð's annual accounts for 2024 and the new budget for 2026–2029 paint a clear picture: We are turning the municipality's operations around for the better and at the same time laying the foundation for investments, maintenance and a targeted reduction in debt.
This doesn't happen by itself. Success is based on operational discipline, prudent revenue planning, process review, and clear priorities.
Operational results that create space
The 2024 annual accounts showed that the combined operating result of Sections A and B amounted to 1,077 million ISK. The operating result of Section A was 419 million ISK. Since Section A was operated with a deficit the previous year. The municipality's 2024 annual accounts showed its best performance since the beginning, so it was not just a "good year", it was a success.
When Fjarðabyggð's annual accounts for 2023 were presented, it became quite clear that the municipality's operations were not on a strong enough basis. A report submitted when the annual accounts were processed pointed out that there were operational problems, that the A-section was not making ends meet despite increased income, and that it was necessary to respond with improved management, streamlining, and clearer prioritization.
This protocol was not presented to criticize individuals but to point out the fact that the business needed to improve.
The business is now starting to generate a surplus, which creates more space in the operation.
No new long-term loans from March 2024
An important fact in this context is that Fjarðabyggð has not taken out any new long-term loans from credit institutions in the past 2 years.
At the same time, we have continued to build and undertake projects that would have been almost automatically financed with new loans. This shows that the business is better able to support investments than before and that we are not shifting burdens onto the future.
Debt ratio decreases – the municipality becomes stronger
The 2026–2029 budget assumes that the debt ratio of the A and B segments will continue to decline, from 116% in 2022, and the plan assumes that the ratio will decrease to around 73% in 2029.
That's a big change in a short period of time and a clear indication that debt is becoming a lighter part of the revenue base.
The debt ratio of A-shares is also decreasing, although more slowly than in the group, partly due to internal debt between A-shares and B-shares. This does not change the overall picture that the municipality is becoming financially stronger with a lower debt burden compared to regular income.
Debt benchmark falls far short of statutory maximum
According to the Local Government Act, the debt limit for a group of A and B units may not exceed 150% of regular income.
In our case, we are well within that range – and heading even lower.
The budget assumes that:
- the Group's debt ratio will decrease from around 72% at the end of 2024 to around 40% in 2029,
- The debt ratio for Part A will decrease from around 100% at the end of 2024 to around 75% in 2029.
This means in simple terms:
We are moving the municipality into a much safer debt position, with more room to meet future fluctuations and uncertainties.
The budget also assumes that long-term loans to credit institutions will decrease:
- from around ISK 5.5 billion at the end of 2024,
- down to about 3.4 billion ISK by the end of 2029 (at current prices).
This is happening alongside increased construction. It tells us that we are getting a handle on the debt situation without any optimization that will affect maintenance into the future.
Investments, maintenance and service
The 2026–2029 budget is not just about percentages. It's about what they do for society.
In the coming years, emphasis will be placed on:
- development and maintenance of kindergartens and primary schools,
- strengthening sports facilities,
- the continued development of the Mjóeyrarhafn and other port facilities,
- renovation of water supply, sewage and other basic infrastructure.
The 2024 financial statements and the 2029 budget therefore show not just numbers – but strategy:
We intend to support the future with strong operations, not increased debt.
Optimization as a real improvement
This would not have been possible without optimization and changes in working methods.
It consists of:
- procurement review and improved procurement policy,
- a reduction in full-time equivalents in a normal manner, without reducing services to residents,
- clearer responsibilities and better processes,
- the introduction of a financial rule that maintains discipline in spending,
- a prudent income plan that is not based on assumptions or other uncertainties.
Fjarðabyggð : a responsible society with a strong foundation
When looking at:
- operating results 2024,
- decreasing debt ratio,
- decreasing debt standards,
- long-term loan repayment,
- and a budget that continues in the same direction,
the result is clear:
Fjarðabyggð is to strengthen its position, build infrastructure, perform maintenance, and reduce debt, all at the same time. It is not a given. It requires discipline, prioritization, and targeted action.
But even though the situation is stronger, it is clear that we must continue to be vigilant.
Uncertainty in global affairs, fluctuations in the economy and the risk of unforeseen expenses call for us to continue on the same path. We can't afford to be complacent. We must continue to play our cards well, exercise restraint and maintain the ambition that lies behind the budget for the coming years.