The financial balance of the general government (i.e. the central government, the social security funds and the local governments) is estimated as 29.5 billion ISK in deficit in 2019 or 1% of GDP, compared with a surplus of 22.8 billion ISK in 2018 or 0.8% of GDP. The general government revenue in current prices increased by 1% and the expenditure of the general government also increased by 5.5% from the previous year.

Revenue due to stability contribution for 384.3 billion ISK are included in 2016. Preliminary figures for 2019.

Turnaround in financial balance in 4th quarter of 2019
Meanwhile, the financial balance of general government is estimated to be negative by 8.3 billion ISK in the fourth quarter of 2019, or 1.1% of the quarterly GDP. The turnaround in financial balance is due to, among other things, the contraction in revenues and overall the general government revenues are projected to have declined by 1.1% in the fourth quarter of 2019. At the same time, the general government expenditure is estimated to have increased by 1.8%. Public sector labour costs is the largest expenditure item and is estimated to have increased by 4.8% from the same quarter last year.

Preliminary figures for 2019.

General government revenues were 40.9% of GDP
The general government total revenues amounted to 1,213.3 billion ISK or 40.9% of GDP in 2019. In 2018 the general government total revenues were 1,201 billion ISK or 43.1% of GDP. This translates to a government revenue increase of 12 billion ISK in current prices and a nominal growth of 1%.

Revenue due to stability contribution for 384.3 billion ISK are included in 2016. Preliminary figures for 2019.

The central government total revenues amounted to 872.5 billion ISK in 2019, a decrease of 0.8% from the previous year. Local government revenues increased by 5.6% and totalled 383 billion ISK in 2019. Social security contributions increased by 12.9%, to a total of 283.5 billion ISK in 2019.

¹ Revenue due to stability contribution for 384.3 billion ISK are included in 2016.
² Preliminary figures.

Taxes on income increased by 3.6% in 2019
Taxes on income are the largest revenue item in the general government accounts and are estimated to have generated 43.7% of the general government revenue in 2019. In total, revenues from income taxes amounted to 530 billion ISK in 2019, increasing by 3.6% from the previous year. Total income taxes in 2019 amounted to 17.9% of the year’s GDP. Taxes on goods and services increased somewhat less than income taxes in 2019, or by 1.6%, and contributed 28.6% of the total revenue (11.7% of GDP).

¹ Revenue due to stability contribution for 384.3 billion ISK are included in 2016.
² Preliminary figures.

Public consumption expenditure (i.e. wages and salaries, use of goods & services and depreciation) amounted to 721.9 billion ISK or 24.3% of GDP in 2019, an increase of 7.8% compared with the year before. Wages and salaries expenditures increased by 6.3% in 2019 and investment expenditure decreased by 14%, continuing an upward trend observed in the last few years with a 3.6% share of GDP last year.

Social transfers to households increased by 16.7% in 2019, and were 7.4% 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 are estimated to have decreased by 30% since 2017. As a percentage of GDP, interest expenditure was 2.4% in 2019, compared with 3.9% in 2017.

¹ Preliminary figures for 2019.

The significant growth in public investment in 2018 can partly be explained by the transfer of the Hvalfjarðargöng road tunnel from the private limited company Spölur to the central government. Preliminary figures for 2019.

Increased expenditure to health and education
The largest government expenditure item is on health expenditure and has been increasing as a percentage of GDP from 2015. In 2019, the total government expenditure on health is estimated to be 227.5 billion ISK, 18.3% of the total government expenditures. Health expenditure as a percentage of GDP has increased every year from 2015, to 7.7% 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 is estimated at 203.8 billion ISK in 2019, 6.9% of GDP. After nearly continuous decline from 2005 in government expenditure on education as a percentage of GDP the expenditure has increased 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 16.1% and preschool 10.4%. Overall, education expenditures were 16.4% of the total government expenditure in 2018.

Preliminary figures for 2019.

Government gross debt stood at 68.6% of GDP in 2019
General government financial assets amounted to 1,589.1 billion ISK at year-end 2019, 53.6% of GDP. Total government liabilities amounted to 2,034.5 billion ISK, or 68.6% of GDP, compared with 70.5% at year-end 2018. This is the eighth consecutive year that public liabilities, as a percentage of GDP, decline, reaching the lowest level in over a decade.

At year-end 2019, foreign loans are estimated at 6.4% of GDP, having decreased significantly in recent years. Domestic loans as a percentage of GDP have also decreased and were 8.7% of GDP at year-end 2019. Financial assets and liabilities are estimated based on cash transactions data and will be revised as more detailed data becomes available.

¹Preliminary figures for 2019.

Preliminary figures for 2019.

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