DKK 200m state deficit projected for 2024

The Faroese economy is strong, but there are huge challenges ahead. And politicians are doing far too little to address these challenges.

So said Fróði Magnussen, chairman of the Economic Council, when he presented the council’s autumn report this morning.

“It’s time for us to ramp up our rhetoric because we have been warning against government overspending for years. Yet we continue to see short-sighted budget planning,” he said.

The council expects a DKK 30 million state deficit for 2023, but the deficit is likely to surpass DKK 200 million in 2024, according to the new report.

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“Seeing as we have virtually no unemployment and our tax revenues are higher than ever, we should expect a budget surplus. A surplus is crucial because government spending will rise massively in the coming years as the population is ageing,” he said.

“We need to make some structural changes and we must further increase our retirement age to ensure some sustainability in our economy. The longer we wait, the higher the bill we pass on to our children.”

He pointed out that whereas there are currently 4-5 workers per pensioner, this figure will soon go down to 2.5-3, depending on what pension reforms are implemented.

“If we exclude children from this equation, the worker-to-pensioner ratio will approach 1:1, which is obviously a cause for concern.”

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Finance minister Ruth Vang was present at today’s presentation of the autumn report.

“I cannot say that I disagree with this criticism. We have been ambitious in our spending, perhaps too ambitious,” she said.

“We are looking at ways to increase our state revenues. Increasing the pension age is one way of doing this, but we are also looking for ways to limit the growth of our operational spending.”

She added that she will take the Economic Council’s report into consideration in her budget planning.

Read the Faroese version of this article here.

More Faroese News in English.