The Republic of Iceland – Government Debt Management

The Government's response to the corona virus pandemic has been highly successful and the outlook is brighter than expected last year. Household disposable income increased in 2020 and the contraction turned out to be significantly smaller than expected. The government's actions over the past year have succeeded in mitigating the economic crisis, with four thousand operators and tens of thousands of individuals using various support measures, amounting to tens of billions of ISK. A smaller economic recovery is forecasted this year, but in 2022 and 2023 it will be stronger and then driven by an increase in tourism. The fiscal plan assumes that the Treasury's performance will gradually improve until a positive primary balance is reached in 2025. In the next few years, the Treasury's debt will increase, but the debt position will nevertheless improve since the last financial plan. These are the main points of the new fiscal plan for 2022-2026, which is presented today. Further details can be found on the Government's website www.government.is