Iceland Mag

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Iceland Mag

Economy

General government surplus in 2016 amounted to 17.2% of GDP

By Staff

  • Huge surplus From a double digit deficit in 2009 to a massive surplus, the Icelandic government has been paying down debt created by the 2008 financial meltdown. Photo/Valli

The general government (central government, local government and social security funds combined) had a positive balance in 2016 of 416.8 billion ISK (3.85 billion USD/3.58 billion EUR), which amounts to 17.2% of GDP. This is a significant improvement compared to 2015 when the government had a deficit of 18.5 billion ISK, or 0.8% of GDP.

The surplus in the fourth quarter was 4.3% of the quarterly GDP, and 9.4% of total revenue of the general government.

Large stabilization payments from estates of fallen banks
Most of the surplus is due to extraordinary one-time revenue from the exit tax imposed on the estates on the fallen banks. However, even in the absence of the exit tax the general government would have had a surplus of 32.5 billion ISK (300 million USD/280 million EUR), or 1.3% of GDP.

The general government had a deficit from 2008-2015. In 2008 the deficit was in excess of 13% of GDP.

Government debt continues to shrink
The total liabilities of the general government amounted to 87.8% of GDP at the end of 2016, having dropped from 126.7% of GDP in 2011.

According to the preliminary figures on the general government finances 2016, published by Statistics Iceland, government expenditures in 2016 amounted to 41.2% of GDP, compared to 42.9% of GDP in 2015. Government revenue amounted to 58.4% of GDP in 2016, primarily due to the stability payments of the estates of the fallen banks.  In 2015 government revenue was 42% of GDP.

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