Balance of payments in the first half of 2003 and the external position

The deficit on Iceland's current account in the first half of 2003 amounted to 17.9 billion kr. according to preliminary figures from the Central Bank. In the second quarter the current account deficit amounted to 15.2 billion kr., compared with 1.5 b.kr. at the same time in 2002. Measured at fixed exchange rates(1), exports of goods and services contracted by 2.3% while imports increased by 10.2% from the same period the previous year. The combined deficit on the income account (compensation of employees, interest payments, and dividends and reinvested earnings) and current transfer was 9 b.kr. in the first half of 2003, which was somewhat less than in the same period last year.

Balance of payments in b.kr.

Capital inflow measured 40.5 b.kr. during the first half of the year, mainly explained by foreign borrowing and bond issues outside Iceland, but there was also an inflow of 11.8 b.kr. from non-residents' purchases of bonds issued in Iceland. Capital outflows in connection with portfolio investment abroad amounted to 14.1 b.kr., which is more than double the figure for the same period the year before. Some outflow reflected direct disinvestment from Iceland. A high level of other investment was recorded in the first half of 2003, in particular in the form of foreign deposits of Icelandic banks. The Central Bank's foreign reserves amounted to 36.9 b.kr. at the end of June and had changed little since the beginning of the year.

The large negative figure for errors and omissions during the first half of the year is assumed to result from lags in the reporting of capital outflows, in the form of either increased assets or decreased liabilities.

Iceland's net international investment position was negative by 572 b.kr. at the end of June and had decreased by 9.3 b.kr. since the beginning of the year due to the appreciation of the króna and an increase in the value of foreign portfolio investments. Detailed information on the balance of payments and external position is presented in the attached tables.

Today, Monday 1 September 2003, the Central Bank is publishing tables showing the balance of payments and external position on the Statistics page of its website (www.sedlabanki.is).

For further information contact Jakob Gunnarsson, Division Chief at the Statistics Department of the Central Bank of Iceland, tel. (+354) 569-9600.

(1) The trade-weighted exchange rate index was 9.9% lower during the first half of 2003 than in the same period the previous year.

The press release with tables (pdf-file, 125 KB)