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Iceland's Fiscal Budget 2004: Achievements & Plans

Explore the highlights of Iceland's 2004 fiscal budget, including revenue and financing balances, public finances from 2002-2004, and the medium-term public finance program for 2005-2007. The budget focuses on maintaining a surplus, cutting public works, slowing growth in public consumption, and moderate transfer payments while planning tax cuts. Economic assumptions, budget facts, priority areas for allocations, special measures, debt reduction, and stability measures are also outlined. Find detailed information on the Ministry of Finance's website.

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Iceland's Fiscal Budget 2004: Achievements & Plans

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  1. The 2004 Fiscal Budget 1 October 2003

  2. Highlights Treasury revenue balance for 2004 estimated to be ISK6.4 billionor¾% of GDP Net Treasury financing balance for 2004 estimated to be ISK13.7 billion

  3. Public Finances 2002-2004

  4. Revenue surplus excluding irregular items

  5. Treasury balance shows a year-on-year improvement of ISK 13 billion, reflecting greatly increased restraint in public finances

  6. Medium-term Public Finance Programme 2005-2007 • Treasury surplus of at least 1¾% of GDP in 2005 and 1% in 2006 • National public works cut by ISK 5 billion over the next two years, then increased by the same amount 2007-2008 • Growth of public consumption slowed • Annual growth max. 2% in real terms

  7. Medium-term Public Finance Programme 2005-2007 • Moderate growth in transfer payments • Annual rise in transfer expenditure no more than 2½% in real terms • Tax cuts of approx. ISK 20 billion2005-2007 • Neither the Norðurál enlargement nor income from sale of assets are included in budget premises

  8. Medium-term Public FinanceProgramme 2005-2007

  9. Economic assumptions

  10. New period of growth

  11. Price levels remain steady %

  12. Purchasing power grows

  13. Low level of unemployment

  14. Temporary rise in current account deficit

  15. Main assumptions for 2004 • Economic growth 3½% • Price level rise 2½% • Purchasing power increase 2½% • Unemployment 2½% • Current account deficit 3¼% of GDP • ISK Index 125

  16. Budget facts and figures

  17. Treasury expenditure drops in real terms* * Excl. irregular items

  18. Treasury tax revenue almost unchanged

  19. Priority areas • Allocations to seniors’ pensions increase by 17% • Health care allocations increase by 8% • Increased allocations to education, esp. to universities, upper secondary schools, research and Students’ Loan Fund • Restructuring of research with expansion of research and technology funds

  20. Special measures concerning income and expenditure • Operating expenditure reduced by ISK 700 million • ISK 1500 million reduction in transfer payments • New investment reduced by ISK 1500 million • Additional revenue of approx. ISK 1000 million

  21. What has been accomplished?

  22. Treasury debt

  23. Reduced interest expenditure

  24. Additional contribution to Civil Servants’ Pension Fund, with interest Imputed 5% interest 2003 and 2004

  25. In summary • Public finances applied to counter inflationary effects of heavy industrial projects • Debt and debt service burden reduced • Opening up possibilities for tax cuts 2005-2007 • Ensuring stability

  26. The Budget itself and accompanying documentation is available on the Ministry’s website:www.ministryoffinance.is

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