Fjárlán

Fjárlán is a term used in Icelandic public finance to refer to the portion of the annual budget that authorizes the government to borrow money to cover shortfalls between revenues and expenditures or to finance capital investments. It is a component of fjárlög, the annual budget law, and is distinct from operating appropriations because it prescribes the government's gross borrowing requirement for the year. The concept is anchored in standard public-finance practice: the state plans its financing needs in the budget and borrows in the domestic or international debt markets to meet them. In practice, fjárlán is implemented through the issuance of government securities and other borrowing instruments by the state treasury or the debt-management authority, with the resulting debt service appearing in future budgets.

The amount approved for fjárlán in the fjárlög provides a ceiling or framework for borrowing during the year. Actual borrowing decisions are coordinated with macroeconomic projections and debt-management strategies, and must comply with fiscal rules and debt targets set by law or policy. The use of fjárlán can be directed toward short-term liquidity management as well as capital investment programs indicated in the budget.

Critics may argue that reliance on fjárlán increases the public debt burden and can crowd out private investment if not managed prudently. Proponents counter that it enables timely financing of essential public services and long-term investments, smoothing fluctuations in revenue.

See also: budget, public debt, debt management, Icelandic financial policy, government bonds.