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Ministry of Finance and Economic Affairs

Total Treasury debt

Press Release No. 8/2010

  • Total Treasury debt at the end of 2009 corresponded to 78 per cent of GDP.
  • Net Treasury debt (i.e. debt less financial assets) amounted to 39 per cent of GDP at the same time.
  • Substantial assets in financial and energy concerns offset the net debt of the Treasury.
  • The Minister of Finance recently approved a policy on debt management for the Treasury up to the year 2014.
  • The Treasury‘s liquid asset position is sound and will meet repayments into next year.
  • Prospects for Treasury borrowing are good.

In recent days, there has been some discussion of the debt of the Treasury and its debt management. For this reason, the Ministry of Finance wishes to provide the following information regarding the debt position and its development.

Following the collapse of the banks, the total debt of the Treasury increased from 310 billion krónur in 2007 to 1,176 billion krónur at the end of 2009. The total debt of the Treasury thus amounted to 78 per cent of GDP at the end of 2009.

According to the medium-term program for fiscal finances presented to the Althingi last autumn, the total Treasury finances are projected to be in balance by 2012 and in surplus in 2013. According to the program, debt will begin declining as of and including next year.

In viewing the development of the debt position, it is important to view the source of the increase in debt. Most of the increase is due to investments in assets that mirror the debt accumulation. The foreign debt of the Treasury thus amounted to 356 billion krónur at the end of 2009, but this amount is offset by 281 billion krónur in foreign exchange reserves. Net foreign debt thus amounts to 75 billion krónur.

Debt arising from the reconstitution of the banking system amounts to 186 billion krónur. This amount is offset by the corresponding ownership of capital and credits to the banks.

Debt in the domestic market amounts to 625 billion krónur, against which Treasury deposits with the Central Bank amount to 164 billion krónur.

The Treasury has applied active debt management in the finances of the Treasury and follows a debt management policy that was drawn up last year in cooperation with experts from the International Monetary Fund and other foreign and domestic experts. The policy outlines the aims and criteria for debt management for the next several years.

The liquid position of the Treasury is strong, and Treasury deposits with the Central Bank amounted to 164 billion krónur at the end of last year. The Treasury can therefore refinance 130 billion in loans that mature this year. The financing needs of the Treasury due to deficits have been fully met in the domestic bond market, indicating the faith that domestic investors have in the Treasury.

The table below shows the assets and debt of the Treasury at the end of 2009. Treasury debt is divided into domestic and foreign debt. Financial assets consist of loans extended and deposits.

Domestic debt
- Market securities
- Bank refinancing
- Other domestic debt
Foreign debt
- Foreign debt
Total debt
Deposits and loans extended
Net debt


The Ministry of Finance, March 15th 2010 


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