In the first quarter of 2020, the financial balance of the general government (i.e. the central government, the social security funds and the local governments) is estimated at 32.2 billion ISK in deficit or 4.8% of quarterly GDP. This can be compared to a deficit of 5.5 billion ISK in the first quarter of 2019.
Overall, general government revenues are estimated to have decreased by 5.3%, compared to last year’s corresponding quarter. The decline can largely be explained by lower tax revenue with central government. Also, there were no dividends paid by publicly owned financial companies credited in the first quarter of 2020 compared to 5.3 billion ISK in the same period of 2019.
Total expenditure are estimated to have increased by 4.1% from last year’s corresponding quarter. Compensation of employees are the largest part of expenditure, estimated at 34.3% of total general government expenditure. It is estimated that social transfers to households have increased by 20.8% compared to the first quarter of 2019, and the largest share of the increase is due to increase in expenditure of the Unemployment Insurance Fund.
Limited effect of Covid-19 in 1st quarter
Despite the noticeable impact of Covid-19 in first quarter, reflected in, among other things, decreasing tax revenues and increased expenditure of the Unemployment Insurance Fund, some of the measures undertaken or announced as a response to the pandemic and its consequences were not implemented until the end of the first quarter or later. Therefore, the impact of the pandemic on public finances can be expected to be more clearly reflected in the current quarter, which will be published in September.
| General government finances in 1st quarter | |||
| 2019 | 2020 | ||
| Billion ISK, current prices | 1st quart. | 1st quart. | Change % |
| Total revenue | 283.1 | 268.1 | -5.3 |
| Total expenditure | 288.6 | 300.3 | 4.1 |
| Investment | 16.7 | 17.8 | 6.5 |
| Financial balance | -5.5 | -32.2 | • |
| Financial bal. % of total revenue | -1.9 | -12.0 | • |
| Financial bal. % of quarterly GDP | -0.8 | -4.8 | • |
Preliminary figures for 2019 and 2020.