According to preliminary figures for 2018, the financial balance of the general government (i.e. the central government, the social security funds and the local governments) was 30.7 billion ISK in surplus or 1.1% of GDP, compared with a surplus of 13.9 billion ISK in 2017, 0.5% of GDP. Improved financial balance in 2018 compared with the previous year can be partly explained by a one-off capital transfer of 32.0 billion ISK from local governments to Brú Pension Fund in 2017.

The government deficit 0.1 billion in the 4th quarter 2018
In the 4th quarter of 2018, the financial deficit of the general government was 0.1 billion ISK, compared with a surplus of total 30.8 billion ISK in the first nine months of the year. This adverse development in the last quarter can mainly be explained by slower growth in tax revenues which increased by 0.5% in the last quarter compared with the same period in the previous year. In total, government revenue increased by 3.3% in the 4th quarter of 2018 while total government expenditure is estimated to have increased by 9.2%. Thereof, growth in wages and salaries expenditure is estimated 8.4%.

General government revenue increased by 4.6% in 2018
The general government total revenue is estimated 1,198.7 billion ISK or 42.8% of GDP in 2018, an increase of 4.6% from the previous year. In 2017 the general government total revenue was 1,146.5 billion ISK or 43.8% of GDP.

The central government total revenue is estimated 882.7 billion ISK in 2018, an increase of 3.8% from the previous year. Local government revenues increased by 6.7% and totalled ISK 354.3 billion in 2018. Social security contributions increased the most, by 9.3%, to a total of ISK 245.4 billion in 2018 according to the preliminary figures.

Taxes on income increased by 6.4%
Taxes on income is the largest revenue item in the general government accounts and generated 42.8% of general government revenue in 2018. In total, revenue from income taxes amounted to 513.4 billion ISK in 2018, increasing by 6.4% from the previous year. As a percentage of GDP, income tax was 18.3% in 2018. Taxes on goods and services increased somewhat less in 2018, or by 2.7% compared with the previous year. Taxes on goods and services were 28% of the total revenue in 2018, or 12% of GDP.

Government expenditure increased by 3.1% in 2018
General government expenditure is estimated 1,167.9 billion ISK in 2018, having increased by 3.1% from the previous year. Central government expenditure is estimated to have increased by 5.1%, social security funds expenditure by 9.3%, while local governments expenditure decreased by 0.9% from the previous year. A decrease in local government’s expenditure is due to the local government's 32.0 billion ISK capital transfer to Brú Pension Fund in 2017. Excluding this item, local government expenditures is estimated to have increased by 8.6% in 2018 compared with the previous year.

Public consumption expenditure amounted to 660.5 billion ISK or 23.6% of GDP in 2018, an increase of 7.7% compared with the year before. Wages and salaries expenditures increased by 8.7% in 2018 and investment expenditure increased by 21.3%, continuing an upward trend of the last few years. As a share of GDP, public sector investment last year was 3.8%. Preliminary figures indicate that social transfers to households increased by 9% in 2018, and were 6.5% of GDP compared with 6.3% in 2017. Interest expenditure is estimated to have fallen by 14.7% in 2018 compared with previous year. As a percentage of GDP, interest expenditure was 3.1%, compared with 3.9% in 2017.

Health and education expenditure
In 2018, the total government expenditure on health is estimated at 198.8 billion ISK, 17% of the total government expenditures or 7.1% of GDP.

Government expenditure on education is estimated at ISK 187.4 billion in 2018, 6.7% of GDP. Almost half of the government expenditure on education went to primary education, 3.2% of GDP. Tertiary level expenditures were 19.8% of the total education expenditure or 1.3% of GDP, the upper secondary level expenditures were 16.5% and preschool 10.3%. Overall, education expenditures were 16% of the total government expenditure in 2018.

Government gross debt stood at 68.2% of GDP in 2018
General government financial assets amounted to 1,413 billion ISK at year-end 2018, 50.4% of GDP. Total government liabilities amounted to 1,913 billion ISK, or 68.2% of GDP, compared with 75.3% at year-end 2017. This is the seventh consecutive year that public liabilities, as a percentage of GDP, decline, reaching the lowest level in a decade. At year-end 2018, foreign loans are estimated at 4.5% of GDP, having decreased significantly in recent years. Domestic loans as a percentage of GDP have also decreased and were 8% of GDP at year-end 2018. Financial assets and liabilities are estimated based on cash transactions data and will be revised as more detailed data becomes available.

Statistics Iceland has made changes to government accounts releases. Instead of the traditional Statistical series format, results will from now on be presented in a substantial news release.

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