The deficit on Iceland's current account in the fourth quarter of 2003 amounted to 13.4 billion kr. according to preliminary figures from the Central Bank. In the fourth quarter of 2002 the current account deficit was 2 b.kr. The current account deficit amounted to 45.5 b.kr. over the whole of 2003, compared with a 2.2 b.kr. deficit in 2002. Measured at fixed exchange rates , exports of goods and services contracted by 2% while imports increased by 13.2% from the same period the previous year. The combined deficit on the income account (compensation of employees and investment income) and current transfer was 18.3 b.kr. in 2003, which was marginally greater than in the preceding year. (In the table at the end of the pdf file linked to this announcement, there is a correction to the debt-to-GDP ratios).

 Balance of payments in b.kr.

October-

December 

January-

December

2002

2003

2002

2003

Current Account

-2.0

-13.4

-2.2

-45.5

   Exports of goods and services

72.3

66.7

308.8

284.5

   Imports of goods and services

-71.0

-78.6

-292.9

-311.6

   Income and current transfer, net

-3.3

-1.5

-18.1

-18.3

Capital and Financial Account

4.3

7.7

8.8

31.8

    Financial account excl. reserves

-6.7

6.1

14.6

55.6

    Reserve assets (- increase)

11.0

-13.6

-5.7

-23.4

Net errors and omissions

-2.2

21.1

-6.5

13.7

 Capital inflow measured 31.8 b.kr. in 2003. The bulk of the inflow was foreign borrowing amounting to 263 b.kr., mainly in the form of debt securities issued abroad, while foreign investors bought bonds in the domestic market for 17.7 b.kr. during the year as well. Capital outflows in connection with portfolio investment abroad amounted to 45.4 b.kr., which is considerably more than the year before. A high level of other investment was recorded in 2003, in particular in the form of foreign deposits and foreign lending by Icelandic banks. Foreign direct investment by residents was 15.1 b.kr. in 2003, and foreign direct investment in Iceland 6.5 b.kr. The Central Bank's foreign reserves amounted to 58.1 b.kr. at the end of 2003 and had risen by 23.4 b.kr. during the year, of which 13.6 b.kr. took place in the fourth quarter.

Iceland's net international investment position was negative by 539 b.kr. at the end of 2003, 28 b.kr. less than at the beginning of the year despite the current account deficit. The lower negative investment position can be attributed to the appreciation of the króna and increased market value of foreign portfolio investments, and a positive figure for errors and omissions. Foreign assets amounted to 671 b.kr. at the end of 2003, having increased by 274 b.kr. during the year. Foreign liabilities grew by 246 b.kr. to 1,210 b.kr. at the end of 2003. 

A large positive figure is reported for errors and omissions during 2003, after generally being negative in the preceding years. Such fluctuations reflect lags in the reporting of foreign trade and capital movements. The large positive figure in the fourth quarter is undoubtedly due to a large rise in foreign assets which was not measured until now.

Detailed information on the balance of payments and external position is presented in the attached tables. On Monday March 8, 2004, the Central Bank will publish 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.

Press release with the corrected table (pdf file, 395 kb)

No. 5/2004
March 5, 2004