31.03.2023 · The Government

Faroese Parliament agrees 25 million DKK reduction of Danish block grant in 2023

Faroese Parliament agrees 25 million DKK reduction of Danish block grant in 2023

With a planned surplus of 144 million Danish kroner,  the Faroese Parliament - Løgting – has adopted a final budget for 2023, including a 25 million kroner reduction of the block grant from Denmark.

Provisional budget

So far this year, the Government has been working with a provisional budget, after the early election in December meant that a final budget for 2023 could not be adopted before the end of the fiscal year.

Reduced block grant

The new budget, which totals 7.275 billion DKK, reflects some of the key priorities of the new Government, including the coalition agreement to reduce the block grant from Denmark by 100 million over the next 4 years. Parliament has now adopted the first phase of this plan and the grant will be reduced from its present level of 641.8 million to 616.8 million DKK. With an estimated Faroese GDP of around 26 billion DKK in 2023, the block grant will correspond to 2.4% of GDP, and even less in subsequent years, with a continued strong economy and a further reduction of the grant by 25 million annually to 2026.

Greater economic independence

Finance Minister Ruth Vang welcomed the cross-party support in Parliament for the Government’s fiscal policies. “We aim to achieve greater economic independence for the Faroe Islands, while supporting a range of measures to strengthen economic resilience and finance our priorities for improving social welfare. These are not conflicting objectives. On the contrary, they should always go hand-in-hand in any responsible approach to managing a nation’s finances sustainably,” said Minister Vang.