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3.2 Financials of Municipalities

3.2.4 Municipal debt

Relates to the following UN World Goals

11. Sjálfbærar borgir og samfélög

Relates to the following subgoals

11.a

Support positive economic, social and environmental links between urban, peri-urban and rural areas by strengthening national and regional development planning.

12. Ábyrgð neysla og framleiðsla

Relates to the following subgoals

12.7

Promote public procurement practices that are sustainable, in accordance with national policies and priorities.

Progress

Sustainability.is

Figure 1. The ratio of debt/income in Municipalities in East Iceland 2002 - 2020.

Sustainability.is

Figure 2. Liabilities and obligations in thousands of ISK in Fjarðabyggða, Múlaþingb, Vopnafjarðahreppur, and Fljótsdalshreppur 2002 - 2020 in consumer price level index for 2020 (481,9).

a Fjarðabyggð in its current form was established with the merger of the municipalities Fjarðabyggð, Mjóafjarðarhreppur, Austurbyggð (previously Búðahreppur and Stöðvarhreppur) and Fáskrúðsfjarðarhreppur in 2006. In the year 2018, Breiðdalshreppur merged into Fjarðabyggð. Figure 2 shows the combined liabilities and obligations in Fjarðabyggð and its preceding municipalities in 2002-2020.

b Múlaþing in its current form was established with the merger of the municipalities Seyðisfjörður, Borgarfjörður, Djúpivogur, and Fljótsdalshérað in 2020. Figure 2 shows the combined liabilities and obligations in Múlaþing and its preceding municipalities in 2002-2020.

Raw data in excel

Updated: December 20, 2021
Source: Icelandic Association of Local Authorities, retrieved November 26, 2021

Metrics, Targets and Monitoring Protocol

What is measured?

Municipal debt level in East Iceland

Monitoring Protocol

Municipalities in East Iceland will make this data available annually.

Target

Not applicable

Possible countermeasures

Not applicable, monitoring only.

Changes of indicator

This indicator was originally number 15.1. It was then named Financial Status of municipalities and can be found under that number in documents of the project from 2005 and 2006.

The indicator number has been changed twice.

Table 1. Changes to name and number of indicator.
Year Nr. Indicator name
2020 3.2.4 Municipal debt
2007 3.5d Financial Status of Municipalities

This indicator was discussed during teamwork session at the initiative's annual meeting 2015. The conclusion was to keep criterions a and b unchanged but add municipal gross margin and municipal debt.

The criterion for part a was originally defined as: "The ratio of total municipal revenue that came from the construction and operation of Fljótsdalsstöð power plant and Fjarðaál smelter". When monitoring started in 2005 the criterion was changed to "Changes of municipal income tax in selected municipalities". The reason was that information was unavailable for the former criterion but the revised one is available in yearbooks of municipalities.

Baseline

Table 2. Municipalities in East Iceland: Income and expenses 2002
Municipalities Income (thousands of ISK) Expenses (thousands of ISK) Income/Expenses ratio
Austur-Hérað 894.708 910.107 0,983
Norður-Hérað 109.820 111.838 0,982
Fellahreppur 168.986 181.159 0,933
Austurbyggð 431.413 477.795 0,903
Fáskrúðsfjarðarhreppur 20.269 19.638 1,032
Fjarðabyggð 1.407.409 1.419.177 0,992
Fljótsdalshreppur 38.530 39.158 0,984
Borgarfjarðarhreppur 61.371 58.737 1,045
Breiðdalshreppur 107.225 128.387 0,835
Djúpavogshreppur 209.948 228.598 0,918
Mjóafjarðarhreppur 10.807 11.560 0,935
Seyðisfjarðarkaupstaður 404.161 424.244 0,953
Skeggjastaðahreppur 41.933 50.079 1,037
Sveitarfélagið Hornafjörður 958.469 1.031.925 0,929
Vopnafjarðarhreppur 320.146 366.972 0,872

Source: Samband íslenskra sveitarfélaga. Annual report for Municipalities 2003.

Table 3: Baseline in current form of municipalities in East Iceland.
Municipalities Income (thousands of ISK) Expenses (thousands of ISK) Income/Expenses ratio
Fljótsdalshérað 1.173.514 1.203.104 0,975
Fjarðabyggð 1.869.898 1.928.170 0,970
Fljótsdalshreppur 38.530 39.158 0,984
Borgarfjarðarhreppur 61.371 58.737 1,045
Breiðdalshreppur 107.225 128.387 0,835
Djúpavogshreppur 209.948 228.598 0,918
Seyðisfjarðarkaupstaður 404.161 424.244 0,953
Vopnafjarðarhreppur 320.146 366.972 0,872
Total 4.184.793 4.377.370 0,956

Updated: November 20th 2017
Source: Samband íslenskra sveitarfélaga (only in Icelandic).

Rationale for Indicator Selection

The Fjardaal and Karahnjukar projects will likely increase revenues from municipalities through increased income and property taxes from direct and indirect employment in the area. The municipalities' expenditure, however, will also likely increase as the additional employees, their families, and others attracted to the local area require municipal services. The main services which must be discharged by the municipalities according to Icelandic law are:

  • Social services
  • Technical services
  • Education, culture, sports and recreation
  • Infrastructure, environment, and planning
  • Operation of harbors (where appropriate)
  • Water works, district heating systems, and other utilities

From phase I/II report on indicators and baseline from April 2005