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Ministry of Finance and Economic Affairs

2011 Government Accounts: Preliminary results from the Financial Management Agency

Preliminary results for 2011 Government accounts have now been released by the Financial Management Agency. Their conclusion is that both revenues and expenditures exceeded estimates by the Ministry of Finance available when the supplementary budget was passed. Revenues totalled ISK 468.1 billion, exceeding the Ministry's estimates by ISK 5.5 billion, while total expenditures amounted to ISK 525.5 billion, overshooting the budget by ISK 6.2 billion.

  • The overall Treasury balance is therefore negative by ISK 57.3 billion, or the equivalent of almost 3% of GDP.
  • The Treasury's primary balance, i.e. outcome net of financial items, is negative by ISK 12.8 billion. This is equivalent to close to 0.75% of GDP, or ISK 1.3 billion more than the revised estimates of the Ministry of Finance predicted.
  • The Treasury's financial balance, i.e. interest expense net of interest income, was therefore negative by ISK 45 billion, or the equivalent of 2.25% of GDP.

These results, like all government accounts, are compiled on an accrual basis. This means that Treasury revenues are recognised when acquired, regardless of when they are collected. The same applied to Treasury expenditures, i.e. they are recognised when established regardless of when payment will be made. Assessing the Treasury results on an accrual basis provides a more accurate measurement of its performance than if a cash basis were used for Treasury accounts. The accounts, however, are also kept on a cash basis for information and comparison purposes.

The 2012 budget provided for a turnaround in the Treasury results: a positive primary balance of close to ISK 36 billion is forecast, equivalent to around 2% of GDP, although high interest expense will mean that the overall Treasury balance will be negative by ISK 20 billion, or around 1.2% of GDP.

Attention is drawn to the fact that these are provisional figures, and that final results will be available in June this year.


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