Anda Uldum: The man with the key to the national coffers and the mines

No test drilling for oil.

Slow progress in establishing new mines.

High unemployment.

A large deficit of 275 million kroner (€36.9m)

And to top it all there is the prospect of introducing rigorous economic reforms in order balance the national budget.

Greenland’s new Minister of Finance and Raw Materials, Anda Uldum from the centre-right Democrats party is not short of challenges. When his party went into coalition with the social democratic Siumut party after last November’s elections, it created a stir. The parties have often been fighting like cats and dogs in parliament over Greenland’s future development.

On the other hand, the two parties agree on crucial political issues, not least on whether Greenland should be mining for uranium. Both the Democrats and Siumut feel the country should not shy away from such activity. 

The Democrats have also managed to influence raw material policies, which means the coalition now acknowledges Greenland’s need to offer favourable conditions in order to attract foreign investors to mining projects. This change of tack is no quick fix in itself, however. It usually takes years from a project is born until a mine opens.

A deficit this year

As a result of last November’s election and the creation of a new coalition government just before Christmas comprising the two parties plus the liberal conservative Atassut party, it was not possible to get a new budget in place before the end of 2014.

The new coalition’s budget proposal was presented last month. It gives a clear indication that major economic challenges lie ahead. The coalition predicts a deficit of just under 85 million kroner (€11.4m) this year, while the aim is to balance the budget by 2018. 

They are far from being close to making ends meet this year.

The government, Naalakkersuisut, is expecting falling revenues from the American Thule Air Base in north Greenland, because the partly state owned company Greenland Contractors did not win the latest tender. Meanwhile the quota for the country’s very valuable natural resource, prawns, has fallen by as much as 14 percent in west Greenland. 

The Death Gap

This hurts when Greenland, like many other Nordic countries, is struggling with traditional welfare challenges: An ageing population and fewer tax payers. 

“The Death Gap is a reality, not a remote threat, which means we need to strictly control our economy this year and in future, and we need to introduce reforms to cut expenses,” said Anda Uldum as he presented the coalition’s budget proposal last month. 

The expression “Death Gap” refers to the not altogether distant gap between state revenues and expenses, if politicians in the short run fail to cut expenses and in the long run fail to introduce economic reforms in order to have enough money for welfare also in the future.

The government has announced 50 million kroner (€6.7m) in cuts, partly by reducing the government administration and by capping public expenses. 

Another new initiative from the new government is three-party negotiations with the social partners.

Anda Uldum wants to invite the parties to talk about a range of reforms, some which are aimed at making it more attractive to work rather than receiving benefits. Because there are some major paradoxes in the labour market.

The latest figures from Statistics Greenland show 4,400 people are registered as unemployed in the municipalities. Yet employers still have to import a lot of labour, and the fisheries usually always lack workers in the high season. 

Meanwhile many people take early retirement. So if the government can get more people into the labour market, everybody’s quality of life will improve and the public sector will save millions of kroner.