Based on preliminary figures the general government balance for the first quarter of 2026 is estimated at a deficit of ISK 23.7 billion, equivalent to 1.8% of gross domestic product (GDP) for the period. By comparison, the government balance is estimated to have been close to balance in the first quarter of 2025, although balance for the year is currently estimated at a deficit of ISK 120.1 billion. The 2025 figures are still based on preliminary data and will be revised in September when final accounts are available.
It should be noted that figures on central government tax revenues have been revised which affects the general government balance for the years 2023–2025. Further information on this revision is provided later in this release.
Overall, general government revenue is estimated to have increased by 3.8% compared with the first quarter of 2025. Preliminary figures indicate that tax revenue increased by 1.9% while other revenue increased by 11.5%. Increase in dividend revenues from government owned companies explain the majority of the increase in other revenue.
Total expenditure is estimated to have increased by 8.3% in the first quarter of 2026. The largest contributors to this increase were an estimated 13.0% increase in social benefits to households, a 20.4% increase in interest expenditure and 8.3% rise in expenditure on collective consumption.
The delineation of the general government sector in the national accounts and government finance statistics is based on the European System of Accounts (ESA 2010). The general government sector includes, among other entities, government lending funds, which have a significant impact on interest revenue and expenditure. A methodological paper published on 30 November 2020, available on the Statistics Iceland website, provides a detailed discussion of the principles underlying sector classification and the treatment of classification issues concerning state-owned enterprises and institutions.
Revision of Central Government tax revenues 2023-2025
In parallel with the publication of government finance statistics for the first quarter of 2026, Statistics Iceland is publishing the results of a revision of central government tax revenues for the years 2023 to 2025.
Since the preliminary figures for 2025 were published on March 12, Statistics Iceland has received more detailed data on the development of revenues due to taxes on sales and services. The more detailed data and additional information brought to light that tax revenues for 2024 were overestimated in previous releases. The time series has now been revised based on the newly acquired figures. The revision affects revenues and, consequently, the financial balance of the general government over the years 2023 to 2025.
In addition, updated information on tax revenues for 2025 has been incorporated, and the preliminary estimates have been revised accordingly.
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