Government Accounts 2023: Better balance in the national economy and lower inflation are the benefits of responsible fiscal policy

The results of Government Accounts for 2023 have now been published and the accounts forwarded to the Icelandic parliament Althingi. The position of the Treasury was further strengthened in 2023. The deficit was significantly reduced and below forecast. For the second year in a row, the position of the national Treasury has improved significantly more than would result from economic growth alone. This reflects the targeted follow-up on the government's policy to restrain the state's activities and ensure a decrease in Treasury debt as a proportion of GDP.

“The benefits of responsible fiscal policy are now reflected in the considerably more balanced national economy and falling inflation, after the economic upheavals of previous years. The society's advantage of the Treasury's strong position is also reflected in how well it was able to undertake large, unexpected and incidental expenditures due to the seismic incidents in Grindavík and the necessary support measures related to them,” Sigurður Ingi Jóhannsson, Minister of Finance and Economic Affairs, points out regarding the results of 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 A, B and C operations for the first time, in accordance with the plan for introducing international accounting standards. The year’s result for the entire consolidation is negative by ISK 81.4 billion. Consolidated revenues amounted to ISK 1,370.8 billion and operating expenditures ISK 1,390.4 billion. Net financing expenses were negative in the amount of ISK 71.9 billion

The overall outcome of Part A-1 of the Government accounts for 2023 is published in the second part of Government Accounts.

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

“Achieving the optimal outcome in state operations is an ongoing challenge. We will therefore continue to take advantage of opportunities to improve services to citizens and build strong infrastructure, while further consolidating the strong position of the Treasury,” the Minister of Finance and Economic Affairs states.

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• Rikisreikningur 2023