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Ministry of Finance and Economic Affairs

Methodology of accounting for Central government debt and claims

I. Analytical framework, concepts, definitions, and classifications

  • Definition: Central government debt is defined as the stock of direct liabilities in the form of securities and loans. Additional data on currency swaps, net, are given.
  • Classification: The debt is broken down into Treasury bonds, Treasury notes and other domestic liabilities and Treasury bills with a maturity of up to one year. Foreign debt covers both long term debt as well as short term commercial paper. Swap obligations are included on a net basis.
  • Conformity with international guidelines: Data are partly based on international guidelines.


II. Scope of the data

  • Institutional coverage: Data cover the obligations of the Treasury, i.e. all budgetary central government fiscal account liabilities in the form of securities and loans (no extrabudgetary central government funds exist in Iceland). Thus, the institutional coverage is the same as for central government operations, but not all liabilities are included.
  • Instrument coverage: The following debt instruments are included: Treasury bonds, notes and bills, other domestic loans, all foreign debt, incl.swaps, net and commercial paper.


III. Accounting conventions

  • Valuation practices: (1) Zero-coupon Treasury bonds are index-linked and valued at nominal face value indexed to domestic prices by using the Consumer price index, less a discount. The discount is amortised linearly over the duration of the loan; (2) Treasury bonds paying interest are index-linked and the interest is compounded annually and valued at nominal face value indexed to domestic prices by using the Consumer price index, plus accrued interest less discount. The discount is amortizised linearly over the duration of the loan; (3) Zero-coupon Treasury notes are not indexed and are valued at nominal face value less discount. The discount is amortizised linearly over the duration of the loan; (4) Treasury notes paying interest are not indexed and are valued at nominal face value plus accrued interest less discount. The discount is amortizised linearly over the duration of the loan; (5) Treasury Bills are valued at nominal face value less discount.
  • Debt denominated in foreign currency is valued at nominal face value and converted to ISK by using prevailing market rates at the end of each period.


IV. Nature of the basic data

  • Data sources: Data are based on accounting records of the Treasury.


V. Compilation practices

Gross vs. net: Data are on a gross basis. The additional data on swaps are on a net basis.

Other changes in the stock of debt: Normally, no other factors than central government net borrowing and/or revaluation of the foreign currency debt may lead to changes in the stock of central government debt. The only possible exceptions are extraordinary cancellations or extinctions.

Consolidation: Data are mostly consolidated.


VI. Other aspects

Government guaranteed debt: Data on government guaranteed debt is available separately.

Other relevant information: None.


Central government claims


Accounting conventions

  • Long-term claims are divided into claims indexed to domestic prices and claims in foreign currency. The claims indexed to domestic prices are valued by using the consumer price index and claims denominated in foreign currency are valued at nominal face value and converted to ISK by using prevailing market rates at the end of the year.
  • Short-term claims less short-term liabilities include accounts receivable (i.e. tax claims and other acounts receivable) minus accounts payable (i.e. claims on tax revenues, accrued unpaid expenditures, accrued unpaid interest and other accounts payable).

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