The financial balance of the general government (i.e. the central government, the social security funds and the local governments) is estimated at 137.0 billion ISK in deficit in 2025, equivalent to 2.8% of GDP. By comparison, the deficit amounted to 169.9 billion ISK in 2024, or 3.7% of GDP.
Preliminary figures suggest that general government revenue in current prices increased by 5.2% and general government expenditure increased by 3.3% from the previous year.
The financial balance of the general government, along with financial assets and liabilities are estimated based on preliminary data. The results will be revised in September 2026.
53 billion ISK deficit in fourth quarter of 2025
The financial balance of the general government is estimated to be negative by 53.0 billion ISK in the fourth quarter of 2025, equivalent to 4.2% of the quarterly GDP. In comparison, the government deficit was 41.8 billion ISK in the fourth quarter of 2024. The general government revenues are estimated to have increased by 4.8% and the general government expenditure by 6.4% between the fourth quarters of 2024 and 2025.
General government revenues 42% of GDP
The general government total revenues are estimated at 2,093.0 billion ISK in 2025, which amounts to 42.2% of GDP. In comparison, the government revenues amounted to 1,988.6 billion ISK in 2024, or 43.4% of that year's GDP. This translates to an increase in government revenues of 104.4 billion ISK in 2025 at current prices.
Central government total revenues are estimated to have increased by 3.9% from the previous year, amounting to 1,490.0 billion ISK in 2025. Local government revenues are estimated at 670.1 billion ISK, which is an 8.8% increase from the previous year. The revenues of the social security funds increased by 13% during the period and are estimated at 456.0 billion ISK in 2025. It should be noted that 99% of the social security funds revenues are transfers from the central government. At the central government level, the contributions to the social security funds are categorised as transfers to other levels of government. When general government revenues and expenditures are combined, contributions between government units are adjusted to prevent overestimation of revenues and expenditures.
Statistics Iceland’s treatment of general government accounts follows the European System of Accounts (ESA2010). The treatment of the sale of assets and income from associated companies and joint ventures differs from the treatment of the Governments Accounts and municipalities. In Statistics Iceland's general government accounts, income from the sale of assets, shares of income and changes in the value of assets are only recognised in the balance sheet. Revenues from publicly owned companies are only recognised as income in the form of dividends.
Government expenditure at 45% of GDP
General government expenditures are estimated at 2,230.0 billion ISK in 2025, which amounts to 45.0% of GDP. In comparison, expenditures amounted to 2,158.4 billion ISK in 2024, or 47.1% of that year's GDP. Central government expenditures are estimated at 1,605.8 billion ISK in 2025, an increase of 2.1% from the previous year. Local government expenditures are estimated at 692.4 billion ISK in 2025, which is an increase of 8.1% from the previous year.
The moderate increase in total general government expenditure in 2025 can largely be attributed to the fact that considerable expenditures incurred in 2024 due to measures taken by the government in response to seismic activity and volcanic eruptions near the town of Grindavík. In the economic classification, these measures are recorded as transfers other than subsidies, except for expenditures related to protective barriers, which are recorded under local government investment.
Government final consumption expenditures (i.e. wage expenditures, use of goods and services and depreciation less sales of goods and services), increased by 8.8% year-on-year and are estimated at 1,291.7 billion ISK in 2025, or 26.1% of GDP. When taking price changes into account, this corresponds to volume increase in government final consumption of 1.2%. Expenditures on social benefits to households increased by 9.8% year-on-year and are estimated at 358.6 billion ISK in 2025.
General government investment expenditure is estimated at 198.0 billion ISK in 2025, which amounts to 4.0% of the year's GDP. This is a 6.4% increase from the previous year at current prices. When depreciation is deducted, net investment of the general government amounts to 61.0 billion ISK in 2025.
General government interest expenditures are estimated at 211.7 billion ISK in 2025, which represents little change from the previous year. Considerable uncertainty remains in the preliminary figures.
It should be noted that the scope of the general government sector in national accounts and in statistics on government finances follows the European System of Accounts (ESA 2010). The sector includes, among others, government loan funds, which have a substantial impact on general government interest income and expenditure. An explanatory report published on 30 November 2020, available on the Statistics Iceland website, discusses the methodological basis for sector classification and the resolution of issues concerning the classification of state-owned enterprises and institutions.
General government gross debt 84% of GDP at the year-end 2025
General government net financial assets are estimated to have been negative by 1,575.6 billion ISK at the end of 2025, equivalent to 31.8% of GDP. In comparison, in 2024 general government net financial assets were negative by 1,562.6 billion ISK or 34.1% of GDP.
General government financial assets are estimated at 2,598.5 billion ISK at the end of 2025, or 52.4% of GDP, which is an increase of 2.0% from the previous year. General government total liabilities increased by 1.6% year-on-year and are estimated at 4,174.0 billion ISK at year-end 2025, or 84.2% of GDP. In comparison, general government total liabilities amounted to 4,110.2 billion ISK in 2024, or 89.8% of GDP.
Central government gross debt is estimated at 3,542.7 billion ISK at the end of 2025, or 71.5% of GDP. Estimated gross debt of local governments amounts to 639.7 billion ISK, or 12.9% of GDP.