According to parliament’s budget bill, approximately 32 billion ISK will be cut from spending next year, and an additional 11 billion ISK will be coming in.
Sources close to RÚV report that the cuts will include a 5% spending reduction in the social welfare system – which includes health care, pensions, and disabled peoples’ services among other things – and a 10% reduction in other areas of the budget. Public servants, i.e., government employees, will also be subject to a one-year salary cap, which would save about 5 billion ISK in itself.
The government adjusted its initial estimate of needed spending cuts from 50 billion ISK to 43 billion, which is taken care of through reduced spending and additional revenues.
The IMF has estimated that Iceland will have a fully balanced budget by 2014.