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Economy

First time since end of WWII: At end of Q3 2016 Icelandic assets abroad outstrip foreign debt

By Staff

  • Már Guðmundsson The Central Bank director speculated that it was possible we might have to go back 1000 years, to the Viking age, to find a time when Icelandic assets abroad exceeded Icelandic foreign debt. Photo/Stefán

The preliminary figures on the Icelandic balance of payments for the third quarter in 2016, released by the Icelandic Central Bank (PDF), show a dramatic improvement in the balance of payments, primarily due to tourism and services. As a result of the strongly positive balance of payments Iceland has become a net creditor to the rest of the world for the first time since the end of WWII. Icelandic assets abroad at the end of the third quarter were 4,040 billion ISK (36.5 billion USD /34.2 billion EUR), while Icelandic debt to foreign creditors was 3,680 billion ISK (33.4 billion USD/31.1 billion EUR). 

Read more: Icelandic economy continues to boom: GDP grew by 10.2% in third quarter of 2016

The positive balance equals 3% of GDP. This represents a dramatic turnaround since 2009, when the net debt of Iceland to the rest of the world equaled 130% of GDP.

Már Guðmundsson, the Director of the Central Bank, noted that this was a historic moment

"Our best estimates indicate that Icelandic assets abroad outstripped Icelandic debt at the end of WWII, but we cannot confirm this with absolute certainty. If that is not the case, we probably have to go back to the Viking age to find a time when Icelanders owned more abroad than they owed to foreign creditors. But this is certainly something we have not experienced in recent history."

 

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