A milestone in the finances of the City of Hafnarfjörður

•  A complete turnaround has taken place in the operations of the City of Hafnarfjörður – from a deficit to a surplus.
• Debt ratio falls below 150% – the town escapes financial supervision
• The debt ratio of Hafnarfjörður was 169.61% at the end of 2016, compared to 194% at the end of 2015, and has not been lower for a quarter of a century, or since 1992.
• Operating costs almost unchanged year-on-year

Hafnarfjörður's debt ratio
has not been lower since 1992 and no new loans were taken out in 2016 despite
for investments, including in a new nursery. Operating result
the municipality's is positive by 538 million króna, whereas the 2015 annual report
showed an operating loss of 512 million króna. Changed prioritisation
and the optimisation following the 2015 operational review is delivering the expected results
and about discussing a milestone in the operations of the City of Hafnarfjörður.  

Annual accounts
The 2016 budget for the City of Hafnarfjörður was presented to the Hafnarfjörður City Council today. The council's operating result
According to the annual accounts of Parts A and B, the surplus was approximately 538 million króna and A
a positive part of approximately 27 million króna. The main
The deviation is that tax revenues were 657 million krónur higher than forecast.
for and an increase in pension liabilities of 776 million krónur above forecasts,
plus a 215 million króna increase which was carried under miscellaneous items.
Capital items are approximately 732 million krónur lower than the budget forecast.
due to lower inflation and debt repayment. The running of the departments is in good
in line with the budget. There has been a significant turnaround in the operations and
Other operating costs remain almost unchanged from the previous year, at just over 7.4
billions of krónur despite price increases. Tendering of certain service components
are, among other things, delivering these results. The municipality's equity at the end of 2016 amounted to 9,145 million króna in
compared with 8,296 million at the end of 2015 and operating cash from operations A and B
accounting for 3.634 million króna or 15.71% of total revenue, compared to 953
millions in 2015. The debt ratio is now 169.6% and has not been lower
since 1992 when it was 163%. The highest was in 2009 at around 294%. No new loans
were taken in the year 2016, and this is also the first time since at least 1992
when no new loans are taken out. Repayments totalling 2.1 billion were made.
a króna, or approximately 870 million krónur, in excess of repayments under loan agreements. „This annual report is in many ways historic
for the municipality and a vivid example of the optimisation that is possible to achieve
in public administration. Professional preparation of actions and a concerted effort by all
Stakeholder engagement is the key to success and now, two years after a thorough review
The success of the measures has become very visible in the running of the local authority.“ says
Haraldur L. Haraldsson, Mayor of Hafnarfjörður. Working capital from operations has increased by 2,681 million króna year-on-year and
Great emphasis is placed on us continuing this journey. We have everything to
to be a role model in so many respects, both here in Hafnarfjörður and beyond.“
says Haraldur.

The financial position of the City of Hafnarfjörður has strengthened significantly on
the year and the debt ratio at the end of 2016 has come down to 148%, and is therefore below 150%
debt ratio in accordance with the regulation on financial criteria and financial supervision
municipalities. Since 2012, the Municipality of Hafnarfjörður has been under special monitoring.
of the supervisory board for municipal finances and in accordance with the adjustment programme was
It is expected that this ratio would have fallen below 150% by the end of 2018. Better
managed to bring the proportion down, but the initial plan had provided for measures
The coming months reflect continued responsibility and stability in operations.
of the municipality. Construction of a new school in Skarðshlíð will begin in the coming
months which will be financed by the sale of blocks of flats, detached houses, terraced houses and
semidetached house plots in the same area. Further
The allocation of plots in Skarðshlíð will take place shortly. Development of a new
The nursing home has already left.
site and there is demand for industrial plots at Völlum and at Hellnahraun,
Kapelluhraun and Selhraun have been multiplying in recent months, in addition to which they are being
to explore where further possibilities and opportunities lie for further development.

The 2016 annual report for the Municipality of Hafnarfjörður can be found HERE.