General government expenditures

10. Oct 2024
Government spending rose DKK 1.2 billion in 2023

Total general government sector expenditure was DKK 13.18 billion in 2023, while total revenue was DKK 13.14 billion. The general government sector thus ran a deficit of about DKK 40 million in 2023. The general government sector includes central government, municipalities, Danish state administration resident in the Faroe Islands and social security funds.

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Big investments in sports and infrastructure

The municipal sector had the highest relative expenditure growth, increasing by 11.9% year-on-year. Municipal fixed capital investment has reached an all-time high, surpassing DKK 1 billion for the first time in 2023. General government sector investments totalled DKK 2.2 billion, an increase of more than DKK 500 million on 2022. The most substantial of these were the Sandoy subsea tunnel and land tunnels in Suðuroy, Sandoy and Norðoyggjar. In the municipal sector, some of the largest investments were major access roads on both sides of the Tórshavn-Eysturoy subsea tunnel, swimming pools in Runavík and Tórshavn and a large sports arena in Hoyvík.

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Distribution of government spending

Government spending is divided into 10 main categories, or ‘functional groups’. The largest of these is ‘social protection’, which includes spending on ‘old age’, ‘families and children’, ‘sickness and disability’ and ‘unemployment’. Expenditures in this functional group amounted to just over DKK 4.6 billion in 2023, making up more than a third of total public spending. The second-highest spending was on ‘economic affairs’, of which road infrastructure accounts for a significant share.

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Road network a high priority

Comparing the distribution of public expenditure by function with the distribution in neighbouring countries, we see that a much larger proportion of Faroese government spending goes to 'economic affairs' than in the other countries. In particular, large investments in roads and tunnels have made this functional group a major area of government spending over the past many years.

Spending on ‘Health’ and ‘General public services’, which largely encompasses the entire public administration, was relatively lower. The substantial investments in sports facilities have made 'Recreation, culture, and religion' a much more significant portion of the total government spending compared with previous years.

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