Please note that this press release was corrected 30 October 2020. Coverage on the general government financial assets and liabilities was corrected and figures updated accordingly. See the table "General government financial assets and liabilities" and the graph "Central and local governments gross debt as per cent of GDP" at the bottom of the release.

The financial balance of the general government (i.e. the central government, the social security funds and the local governments) was 45.4 billion ISK in deficit in 2019, a deficit amounting to 1.5% of GDP, compared with a surplus of 22.1 billion ISK in 2018 or 0.8% of GDP. The increasing general government deficit is in line with preliminary GDP figures for 2019, according to which the GDP per capita fell by 0.3% in real terms in 2019.

2008: The Treasury's takeover of lost claims of 192.2 billion ISK due to the Central Bank's mortgage loans are included.
2016: Revenue due to stability contribution of 384.3 billion ISK are included. The central government's 105.1 billion ISK contribution to the A-part of the State Pension Fund are included as an expense.
2017: The local government's 32.0 billion ISK contribution to the Pension Fund Brú are included as an expense.

General government revenue fell as a percentage of GDP while expenditure remained unchanged
The general government total revenue amounted to 1,210.7 billion ISK or 40.8% of GDP in 2019. In 2018 the general government’s total revenue was 1,200.1 billion ISK or 43.1% of GDP. General government expenditure amounted to 1,256.0 billion ISK, or 42.3% of GDP, in 2019 and the share is unchanged from the previous year.

The general government revenue increased by 10.6 billion ISK in 2019, at current price, compared with previous year and a nominal growth of 0.9%, while general government expenditure increased by 78 billion ISK, or 6.6%.

Revenue due to stability contribution of 384.3 billion ISK are included in 2016.

The central government’s total revenue amounted to 871.6 billion ISK in 2019, a decrease of 0.9% from the previous year. Local government’s revenue increased by 5.4% and totalled 381.2 billion ISK in 2019. Social security contributions increased by 15.3% and were a total of 289.6 billion ISK in 2019.

¹ Revenue due to stability contribution of 384.3 billion ISK are included in 2016.

Revenues from income tax increased by 3.6% in 2019
Tax on income is the largest revenue item in the general government accounts and generated 42.2% of the general government revenue in 2019. In total, revenue from income taxes amounted to 530 billion ISK in 2019, increasing by 3.6% from the previous year. Total revenue from income taxes in 2019 amounted to 17.9% of the year’s GDP. Revenues from taxes on goods and services are almost unchanged from previous year and contributed 27.1% of the total revenue (11.5% of GDP).

¹ Revenue due to stability contribution of 384.3 billion ISK are included in 2016.

Government expenditure increased by 6.6% in 2019
General government expenditure amounted to 1,256 billion ISK in 2019, increasing by 6.6% from the previous year. Central government and local government expenditure rose by 5.7% and social security fund expenditure by 16.3%.

Public consumption expenditure (i.e. wages and salaries, use of goods & services and depreciation) amounted to 726.7 billion ISK or 24.5% of GDP in 2019, an increase of 8.5% compared with the previous year. The share of wage and salary expenditure in public consumption expenditure is 59% and increased by 7.6% in 2019.

Public investment expenditure decreased by 10% in 2019. When excluding in 2018 the effect of transfer of the Hvalfjörður tunnel to the government and investment expenditure due to the Vaðlaheiði tunnel, investment expenditure increased by 1% in 2019 from the previous year. The share of public investment expenditure in GDP has been rising in recent years, measuring 3.7% in 2019.

Social transfers to households increased by 18% in 2019 and were 7.5% of GDP compared with 6.8% in 2018. This increase is largely due to increasing expenditure in pensions insurance and unemployment benefits.

Interest expenditure have decreased significantly over the last two years and have decreased by 24% since 2017. As a percentage of GDP, interest expenditure amounted to 2.6% in 2019 compared with 3.9% in 2017.

The significant growth in public investment in 2018 can partly be explained by the transfer of the Hvalfjörður tunnel from the private limited company Spölur to the central government.

Expenditure on health and education as a percentage of GDP have increased
The largest government expenditure item is health expenditure which has been increasing as a percentage of GDP from 2015. In 2019, the total government expenditure on health amounted to 224.1 billion ISK or 19.0% of the total government expenditures. Health expenditure as a percentage of GDP has been increasing every year from 2015 to 7.5% in 2019 compared with 6.8% in 2015. Health expenditure as a percentage of GDP has not been higher since 2005.

Government expenditure on education amounted to 203.6 billion ISK in 2019, 6.9% of GDP. After nearly continuous decrease in government expenditure on education from 2005, as a percentage of GDP, the expenditure has again been increasing since 2016. Almost half of the government expenditure on education was allocated towards primary education or 3.3% of GDP. Tertiary level expenditures were 19.2% of the total education expenditure or 1.3% of GDP, the upper secondary level expenditures were 16.4% and preschool 10.5% of total education expenditure. Overall, education expenditures were 17.2% of the total government expenditure in 2019.

Government gross debt amounts to 77.7% of GDP in 2019
General government financial assets amounted to 1,613 billion ISK at year-end 2019 or 54.3% of GDP. Total government liabilities amounted to 2,309 billion ISK, or 77.7% of GDP, compared with 70.2% at year-end 2018. The increase in total government liabilities in 2019 is mainly due to revaluation of debt of state-owned entities, resulting in negative equity share.

Domestic loans as a percentage of GDP amounted to 15.2% compared with 8.5% at the year-end 2018. At year-end 2019, foreign loans amounted to 6.4% of GDP, having decreased significantly in recent years.

Statistics

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