Politics

Faroese economy more independent than ever

It is a common misconception that the Faroe Islands are largely financially dependent on Danish subsidies. The Faroese economy, however, has never been more self-sufficient. The Danish block grant currently makes up 3.3% of the Faroese GDP, compared to 11.2% in the year 2000.

The Danish block grant currently makes up 3.3% of the Faroese GDP, compared to 11.2% in the year 2000, figures from the Ministry of Finance show.

It is a common misconception that the Faroe Islands are largely financially dependent on Danish subsidies.The Faroese economy, however, has never been more self-sufficient.

The block grant, an annual subsidy from the Danish Government, currently amounts to 642 million DKK (86 million euro).

The Faroese Government has a national budget of 4.944 m DKK in 2017, in which the block grant funds 13% of spending. This is a decrease of 15.7% since 2000, when the block grant made up 28.7% of the budget.

Kristina Háfoss, Minister of Finance, said: “The block grant is a very small part of the Faroese economy today.”

The increased financial independence is reflected across the economy, which in recent years has experienced a growth of 7-8%, according to Háfoss. The unemployment rate is at approximately 2%t, whilst the population exceeded 50.000 for the first time ever last month.

Háfóss said: “If we look at some key figures, it is evident, for example, that the Faroe Islands have exceeded Denmark and Iceland in terms of GDP per capita. This shows that we have very high levels of production, we are more self-sufficient than ever, as well as being amongst the world’s richest countries.”

“Thus several factors demonstrate that we have become more self-sufficient. The block grant, which is often used as an indicator of our dependence on Denmark, is of declining importance to the economy.”

In 2001 the Danish subsidy was reduced by 366 million DKK to 616 million. It increased slightly as a result of index-linking by the former government in 2012. The current government, which is a coalition of the Republican Party, Progress Party and Social Democratic Party, froze the block grant when they came to power in 2015.

Words: Eir Nolsøe
Sub-editor: Rebecca-May Honeybone
This article was originally published on Faroeislands.fo, 3 May 2017

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