Meginmál

Balance of payments in 2007 and the external position

Balance of payments in 2007 and the external position

NOTE: This article is from 04. March 2008 and is therefore more than 5 years old.

Today the Central Bank of Iceland will publish on its website the pre-liminary statistics for the balance of payments in the fourth quarter of 2007 and the external position at the end of year 2007.

The deficit on the current account was 91 b.kr. in Q4/2007, compared with 29 b.kr. in the third quarter. The principal explanation for the deficit is a turnaround in the income account in the amount of 68 b.kr. This is due primarily to a considerable reduction in the earnings from shares, which stems from negative reinvested earnings, but is partly offset by higher interest income from debentures. Higher interest rate expenditures are more or less offset by lower earnings by foreigners on shares.

The current account deficit for last year was 200 b.kr., a year-on-year improvement over 2006, when it totalled 296 b.kr. This is mainly due to an improvement in the merchandise account balance, which was -88 b.kr. compared to -156.5 b.kr. in 2006.

 

According to these preliminary figures, the current account deficit was 15.8% of GDP (25.5% in 2006), while the Central Bank projected it at 18% in its last forecast.

 

Iceland’s international investment position was negative by 1,845 b.kr. at end of 2007, after deteriorating by 492 b.kr. in the last quarter. Foreign short-term liabilities rose by 523 b.kr. during the quarter. Foreign long-term borrowings rose by 219 b.kr. in Q4. Measured in terms of the Central Bank’s weighted exchange rate index, the exchange rate of the króna was 2.08% lower at the end of the year than at the end of September.

Further information can be obtained from Tómas Örn Kristinsson Director of the Statistics and IT Department of the Central Bank of Iceland, at tel (+354) 569-9600.

No 7/2008

March 4, 2008