The financial balance of the general government (i.e. the central government, the social security funds and the local governments) was 155.2 billion ISK in deficit in 2022, equivalent to 4.1% of GDP, compared with a deficit of 277.5 billion ISK in 2021 or 8.5% of GDP. The general government revenues in current prices increased by 22.6% and the expenditure of the general government increased by 11.2% from the previous year.
General government revenues were 43.5% of GDP
The general government total revenues amounted to 1,649.7 billion ISK in 2022, or 43.5% of GDP. In comparison, in 2021 the general government total revenues amounted to 1,345.2 billion ISK in 2021, or 41.4% of that year's GDP.
The central government total revenues increased by 27.8% in 2022 compared with the previous year and amounted to a total of 1,215.8 billion ISK. At the same time, local government revenues increased by 11% and amounted to a total of 481.8 billion ISK. The revenues of social security funds decreased by 3% and amounted to a total of 373.5 billion ISK in 2022. Social security is financed by transfers from the central government.
Taxes on income and profits is the general government largest revenue item and it generated 42.6% of the total revenue in 2022. In total, the revenue of taxes on income and profits amounted to 703 billion ISK in 2022 and increased by 23.4% from the previous year. General government revenues from taxes on goods and services increased by 16.3% year-on-year. Taxes on goods and services amounted to 440.5 billion ISK during the year, or 26.7% of the total revenue of the general government. Overall, general government tax revenues increased by 19.9% in 2022, which is a large increase from the previous year when they increased by 7.2% year-on-year.
Government expenditure at 47.5% of GDP
General government expenditure amounted to 1,804.9 billion ISK in 2022, or 47.5% of GDP and increased by 11.2% year-on-year. In comparison, the general government total expenditure increased by 8.4% in 2021. Central government expenditure increased by 11.5% in 2022, from the previous year and local government expenditure by 12.8%. Social security funds expenditures decreased by 5.2%.
Public consumption expenditure (i.e. wages and salaries, use of goods & services and depreciation, taking into account sales of goods and services) amounted to 993.9 billion ISK or 26.2% of GDP in 2022. Public consumption expenditure increased by 10.8% compared with the year before, mostly driven by an 10.7% increase in wages and salaries expenditure. The share of wages and salaries is the largest component in public consumption expenditure, or around 57%.
Public investment expenditure in current prices increased by 11.9% in 2022 and amounted to 159 billion ISK. The local government expenditure on investments increased the most or by 19.8% and central government expenditure increased by 7.7%.
General government interest expenditure in current prices increased significantly in 2022, or by 68.7% and amounted to 223.3 billion ISK. General government interest expenditure, as a percentage of GDP, amounted to 5.8% in 2022 compared with 4% in 2021.
Social transfers to households decreased by 7.6% in 2022 compared with a 4% increase the year before, as unemployment has decreased significantly.
General government expenditure by expenditure categories
The largest category in general government operations is social protection. A total of 420.8 billion ISK went to this category in 2022, which amounts to 24.6% of the net expenditures of the general government in 2022.
The second largest category in general government operations is health care, which accounted for 18.4% of the general government net expenditures in 2022, a total of 315.2 billion ISK. This is an increase of 12.6% from last year, at the current price level.
General government net expenditure on education amounted to 245.6 billion ISK in 2022, or 14.4% of net general government expenditure. Almost half of general government net expenditure on education was allocated towards primary education, 16.2% of general government net expenditure on education went to the tertiary education, 15.3% to the upper secondary education and 12.1% to the pre-primary education.
Government gross debt stood at 101.9% of GDP in 2022 The general government financial assets amounted to 2,499.2 billion ISK at the end of 2022, or 65.8% of GDP compared with 74.9% at the end of 2021. The total general government liabilities amounted to 3,869.5 billion ISK at the end of 2022 or 101.9% of GDP. In comparison, the total general government liabilities amounted to 3,585.2 billion ISK in 2021 or 110.3% of GDP. General government outstanding loans amounted to 763 billion ISK in 2022 or 20.1% of GDP, of which domestic loans accounted for 12.7% of GDP and foreign loans for 7.4% of GDP. By comparison, general government outstanding loans amounted to 738 billion ISK in 2021 or 22.7% of GDP.