Reykjavík City's 2026 budget shows robust operations
Reykjavík City's operations for 2025 are well-balanced, and projections show all financial goals will be achieved. The consolidated operations (Section A – Core Operations and Section B – Autonomous Entities) are projected to yield a profit of 14.6 billion króna. The 2026 budget projects continued strong operations and improving financial results.
The initial debate on Reykjavík City's 2026 budget and the five-year plan through 2030 begins in the City Council today.
Working capital exceeding projections reflects strong core operations
The Section A – Core Operations budget, which covers the city's basic functions funded by tax revenue, forecasts a 4.8 billion króna surplus for 2026. The five-year plan projects that Section A profits will grow steadily, reaching 10.6 billion króna by 2030.
Working capital from operations reflects strong core performance, with that ratio projected to be 7.7% of revenue for 2026. The five-year plan anticipates working capital from operations will remain around 8% of revenue. The 2025 forecast indicates that working capital from operations will exceed the original annual plan, reaching 7.9% of revenue. The five-year plan shows all Section A – Core Operations targets under the current financial policy will be met during the planning period.
Strong consolidated financial position
The 2026 budget projects strong operations in both Section A – Core Operations and Section B – Autonomous Entities. Section B includes financially independent companies that are partially or wholly owned by the city. The consolidated operating results are projected to show a profit of approximately 18.7 billion króna.
Working capital from operations is forecast at 15.5% of revenue for 2026, or 48.4 billion króna.
Total investment is projected at 74.9 billion króna for 2026. For 2026, annual borrowing is anticipated to be 53 billion króna, with cash on hand at year-end expected to reach 31.3 billion króna.
The three-year balance benchmark under municipal law is projected to remain positive throughout the planning period, with the debt ratio remaining well below the 150% limit set by municipal law.
City assets approaching 1,000 billion króna
Reykjavík City and its companies manage extensive service and infrastructure projects. Next year, the combined assets of the City's Section A and Section B entities are projected to exceed 1,000 billion króna on the balance sheet, with 470 billion króna in equity. Projected working capital from operations of around 15% or more of revenue highlights the strong position of the City and its Section B companies, supporting significant investment and the financing of capital-intensive infrastructure projects.
Section A – Core Operations assets are projected at 326.8 billion króna at the end of 2026, with an equity ratio of 30%. Net debt as a percentage of revenue is projected at 82% for 2026 and is forecast to decline over the planning period. The Section A – Core Operations debt ratio is projected at 77%, making it the lowest in the capital area.
Development for children and families prioritized
"When we in the majority took control of the city, somewhat unexpectedly, last February, we knew we had been entrusted with the significant responsibility of managing Reykjavík City's finances," says Mayor Heiða Björg Hilmisdóttir. "Prioritizing development for children and families has been a key objective for us. At the same time, we have placed tremendous emphasis on maintaining strict fiscal discipline in operations. The success of our approach is clearly reflected in this first budget we are now unveiling. The City's operations are well-balanced. We are maintaining fiscal discipline. Prudence is our guiding principle."
More information available on Reykjavík City's website