The deficit of the general government (i.e. central government, social security funds and local governments) is estimated at 83.5 billion ISK in the second quarter of 2024, which amounts to 7.4% of quarterly gross domestic product (GDP). In comparison, the deficit in the second quarter of 2023 was 3.3% of the quarterly GDP.
The government finance figures are estimated based on preliminary figures. The results will change when the final accounts are available.
General government revenues are estimated to have increased by 5.2% from the second quarter of 2023. Revenues from taxes and social security contributions increased by 4.0% and property income by 10.8%.
It is estimated that total expenditures of the general government increased by 14.5% in the second quarter of 2024 compared with the same period last year. The main reason for the weak performance of the government sector in the second quarter of 2024 was increased expenditures due to seismic activity and volcanic eruptions near Grindavík. The effects are also noticeable in the fourth quarter of 2023. Measures by the central government to ensure the secure livelihood of Grindavík residents, payments from Natural catastrophe insurance of Iceland, and the purchase of residential property in Grindavík is recorded as either current or capital transfers. The government’s purchase of property in Grindavík is not currently recorded as an investment due to the uncertainty about the value of real estate in the area. This expenditure classification may be revised later.
The scope of the general government sector, as according to European System of Accounts (ESA2010), includes housing and student loan funds owned by the central government. These funds have a substantial impact on interest income and interest expenditure of the general government. In an explanatory report published on the 30 of November of 2020, and available on Statistics Iceland’s website, the methodological basis for the sector classification is explained.