Better balance in the national economy and lower inflation are the benefits of responsible fiscal policy

The results of the government accounts for 2023 have already been published and the reports have been submitted to the Icelandic Parliament Althingi. The Treasury position has been further strengthened in 2023. The deficit has been significantly reduced and below forecasts. For the second year running, the Treasury position has improved significantly beyond what economic growth alone would suggest. This reflects the government’s targeted follow-up action to reduce state activity and ensure that the Treasury debt to GDP ratio is reduced.

“The benefits of responsible fiscal policy are now reflected in a much more balanced national economy and falling inflation, following the economic shocks of previous years. The benefit to society from the strong position of the National Treasury is also reflected in how well it has managed to take on large, unexpected and accidental expenditures due to the seismic shocks in Grindavík and the necessary support measures related to them,” emphasizes Sigurður Ingi Jóhannsson, Minister of Finance and Economic Affairs, in reference to the results of the Government Accounts.

Changes have been made to the accounts due to the introduction of international accounting standards, and the accounts are published as a consolidation of the state’s operations A, B and C for the first time, in accordance with the plan to introduce international accounting standards. The annual result for the entire consolidation is negative by ISK 81.4 billion. Consolidated revenues amounted to ISK 1,370.8 billion, and operating expenses to ISK 1,390.4 billion. Net financing costs were negative by ISK 71.9 billion.

The overall result of Part A-1 of the Government Financial Statements for 2023 is published in Part II of the Government Financial Statements.

It should be noted that the results of the Government Accounts are presented on the basis of International Public Sector Accounting Standards (IPSAS), while the overall results of the fiscal strategy and the annual budget are based on the Government Finance Statistics (GFS) standard. Both methods aim to ensure consistency and international comparability. In order to compare the Treasury’s result in the Government Accounts with the implementation targets of the fiscal strategy and the budget, the results of the annual accounts for operations A-1 must be adjusted to the GFS. On this basis, the budget for 2023 forecasted an overall result that would be negative by ISK 119.6 billion. However, the result for the year turned out to be negative by ISK 20.0 billion. The primary balance, the result before financial items, was positive for the second year in a row by ISK 78.7 billion, while the budget estimates predicted a negative primary balance of ISK 50.3 billion.

The story continues

“Achieving optimal results in state operations is a constant challenge. Therefore, we will continue to seize the opportunity to improve services to citizens and build strong infrastructure, while further consolidating the strong position of the State Treasury,” states the Minister of Finance and Economic Affairs.

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