The financial balance of the general government (i.e. central government, social security funds and local governments) was 169.9 billion ISK in deficit in 2024, equivalent to 3.7% of GDP. In comparison the deficit in 2023 amounted to 101.2 billion ISK or 2.3% of GDP. The general government revenues in current prices increased by 113.6 billion ISK from the previous year, which amounts to 6.1% increase, while the expenditure of the general government increased by 182.3 billion ISK or 9.2% from the previous year.
Government spending in response to natural disasters played a major role in increased government expenditure and the resulting deficit in 2024. Direct costs associated with government measures addressing seismic activity and volcanic eruptions near Grindavík exceeded 87 billion ISK during the year. These costs include the acquisition of properties in Grindavík, the construction of protective barriers, and support initiatives related to housing and the labour market.
Government revenues 43.3% of GDP
The general government total revenues amounted to 1,988.6 billion ISK in 2024, which amounts to 43.3% of GDP. In comparison, the government total revenues amounted to 1,874.9 billion ISK in 2023 or 42.9% of that year's GDP.
The central government’s total revenues increased by 5.0% in 2024 and amounted to 1,434.5 billion ISK. During the same period, local government revenues increased by 9.2% and amounted to a total of 615.7 billion ISK. The social security funds are financed by transfers from the central government.
Taxes on income and profits, which is the general government’s largest revenue item, generated 42.7% of total revenue in 2024. In total, the revenue of taxes on income and profits amounted to 849.6 billion ISK in 2024 and increased by 4.6% from the previous year. General government revenues from taxes on goods and services increased by 12.9% year-on-year, amounting to 563.5 billion ISK or 28.3% of total revenue of the general government. Overall, general government tax revenues increased by 8.1% in 2024. Statistics Iceland’s treatment of general government accounts is according to 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 government’s accounts and municipalities. In Statistics Iceland's general government accounts, income from the sale of assets, share 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 an income in the form of dividends up to a maximum of the previous year's profit.
Government expenditure 47.0% of GDP
General government expenditure amounted to 2,158.4 billion ISK in 2024, or 47.0% of GDP. In comparison, the general government total expenditure was 1,976.2 billion ISK in 2023 or 45.2% of GDP. Central government expenditure increased by 9.9% year-on-year, local government expenditure by 6.1% and social security expenditure by 9.1%.
Net government expenditure, after deducting revenues from the sale of goods and services, amounted to 2,039.8 billion ISK in 2024. Majority of general government expenditure goes towards government final consumption (i.e. wages and salaries, use of goods and services and depreciation, accounting sales of goods and services), which amounts to 58.3% of net expenditures. Government final consumption amounted to 1,188.7 billion ISK in 2024, an increase of 7.9% year-on-year.
Social benefits amounted to 16.0% of net government expenditure in 2024 or 326.6 billion ISK, an increase of 11.3% from previous year in current prices. Subsidies, grants and other expenses amounted to 12.6% of net government expenditure. There was a significant increase in other expenses, current and capital transfers, due to natural disasters in 2024.
General government investment in current prices increased by 3.8% year-on-year and amounted to ISK 186.2 billion ISK in 2024. After accounting for depreciation, net government investment amounted to 55.3 billion ISK in 2024 or 2.7% of net government expenditure.
General government interest expenditure amounted to 10.4% of net government expenditure, or 212.2 billion ISK in 2024, a decrease of 13.6% from 2023 in current prices. It should be noted that the scope of the general government sector, according to European System of Accounts (ESA2010), includes housing and student loan funds owned by the central government. These funds have a substantial impact on interest income and interest expenditure of the general government.
Government gross debt at 89.6% of GDP by 2024
Net financial assets of the government sector were negative by 1,562.6 billion ISK at the end of 2024. Total government gross debt amounted to 4,110.2 billion ISK or 89.6% of GDP. General government financial assets amounted to 2,547.6 billion ISK by the end of 2024 or 55.5% of GDP.