Greenland Finances Are Suddenly Worse, Danish Central Bank Warns
The worsening of finances was partly due to a decrease in expected dividends from government-owned companies.
Greenland’s public finances are pressured after a “surprisingly sharp deterioration” last year, Denmark’s central bank said in an analysis of the Arctic island that’s again stoking geopolitical tensions.
The semi-autonomous territory’s planned austerity measures for 2026 are “necessary,” according to the report published by the Copenhagen-based central bank on Tuesday, pointing out the worsening of finances was partly due to a decrease in expected dividends from government-owned companies.
The government in Copenhagen subsidizes the world’s largest island, which Donald Trump repeatedly has said he wants to take over. The US president has blamed Denmark for not investing enough in Greenland’s defense and has also made vague pledges to invest “billions of dollars” in the territory if he succeeds in getting it.
The roughly 30 billion-krone ($4.7 billion) Greenlandic economy relies heavily on annual subsidies of more than 4 billion kroner from Copenhagen. Since Trump’s advances, AAA rated Denmark has increased investments and has also granted extra funds to boost healthcare services.
Greenland, which doesn’t have its own government bonds, depleted the liquidity at its treasury below the level where it could handle fluctuations in income and expenses without having to borrow, the bank said.
The island’s population of 57,000 people is set to decline by 20% by 2050 and an older population will increase healthcare and elderly care costs, the central bank said. The economy is already pressured by a decline in fishery catches as well as labor shortage, according to the analysis.
