Fund Relations

(As of April 30, 2016)

Membership Status: Joined December 27, 1945

General Resources Account:

	SDR Million	Percent of Quota
Quota	321.80	100.00
Fund holdings of currency	252.00	78.31
Reserve tranche position	69.80	21.69

View Table

	SDR Million	Percent of Quota
Quota	321.80	100.00
Fund holdings of currency	252.00	78.31
Reserve tranche position	69.80	21.69

SDR Department:

	SDR Million	Percent of Allocation
Net cumulative allocation	112.18	100.00
Holdings	111.72	99.58

View Table

	SDR Million	Percent of Allocation
Net cumulative allocation	112.18	100.00
Holdings	111.72	99.58

Outstanding Purchases and Loans: None.

Latest Financial Arrangements:

	Approval	Expiration	Amount Approved	Amount Drawn
Type	Date	Date	(SDR Million)	(SDR Million)
Stand-By	Nov. 19, 2008	Aug. 31, 2011	1,400.00	1,400.00
Stand-By	Mar. 22, 1962	Mar. 21, 1963	1.63	0.00
Stand-By	Feb. 16, 1961	Dec. 31, 1961	1.63	0.00

View Table

	Approval	Expiration	Amount Approved	Amount Drawn
Type	Date	Date	(SDR Million)	(SDR Million)
Stand-By	Nov. 19, 2008	Aug. 31, 2011	1,400.00	1,400.00
Stand-By	Mar. 22, 1962	Mar. 21, 1963	1.63	0.00
Stand-By	Feb. 16, 1961	Dec. 31, 1961	1.63	0.00

Projected Payments to the Fund ¹ (SDR Million; based on existing use of resources and present holdings of SDRs): None.

Implementation of HIPC Initiative: Not applicable.

Implementation of Multilateral Debt Relief Initiative (MDRI): Not applicable.

Implementation of Post-Catastrophe Debt Relief (PCDR): Not applicable.

Exchange Rate Arrangement and Exchange Restrictions:

The de jure exchange rate arrangement is free floating. In 2015, the Central Bank of Iceland (CBI) continued to follow the strategy of increased foreign exchange market intervention as set forth by the Monetary Policy Committee in May 2013. CBI transactions accounted for about 55 percent of total market turnover in 2015, up from 43 percent in 2014, and total turnover increased by around 80 percent y/y. The objective of the intervention strategy is to mitigate short-term exchange rate volatility and expand the CBI’s reserves as much as conditions allow. Exchange rate volatility diminished significantly after the strategy was announced. The de facto exchange rate arrangement is classified as a floating arrangement. The CBI publishes monthly data on its interventions in the foreign exchange market. Iceland has accepted the obligations under Article VIII, Sections 2(a), 3, and 4 but maintains exchange restrictions arising from limitations imposed on the conversion and transfer of (i) interest on bonds whose transfer the foreign exchange rules apportion depending on the period of the holding, (ii) amortized principal on bonds, and (iii) the indexed portion of principal on bonds. The retention of the three exchange restrictions was last approved by the Executive Board on March 3, 2016 (Decision No. 15957-(16/19)). Iceland also has in place measures that constitute exchange restrictions imposed for security reasons based on UN Security Council Resolutions.

Safeguards Assessment:

The 2009 Safeguards Assessment concluded that the overall control environment for the CBI was broadly appropriate for a small central bank, with good controls in the areas of accounting and financial reporting. The CBI’s external and internal audit procedures were not found to be in line with international practices, however, and the assessment noted that the foreign reserves management area would benefit from further development. The authorities have since taken steps to implement the recommendations, notably by appointing an international audit firm to conduct annual external audits of the CBI in line with international standards, establishing an internal audit function, and appointing a Chief Audit Executive per the board approved charter. New reserve management guidelines were approved in 2012. Work on the remaining recommendation—amendments to the Central Bank Act—remains in progress.

Last Article IV Consultation:

Discussions for the 2014 Article IV Consultation were held in Reykjavik during December 8–18, 2014. The Staff Report (Country Report No. 15/72) was considered by the Executive Board on March 9, 2015. Article IV consultations with Iceland are currently held on a 12 month cycle.

Technical Assistance:

Department	Purpose	Date
MCM	Capital account liberalization	March 2010
MCM	Reserves building and liquidity management	June 2010
MCM	Public debt management	July 2010
FAD	Fiscal framework issues	August 2010
MCM	Capital controls liberalization	November 2010
MCM	Converging to EU regulations-credit bureaus	January 2011
MCM	Liquidity management	March 2011
FAD	Tax policy	March 2011
STA	External Sector Statistics	April 2011
FAD	Organic Budget Law	October 2011
FAD	Follow up on Organic Budget Law	May 2012
MCM	Capital account liberalization	March 2013
FAD	IPSAS in Iceland: Towards Enhanced Fiscal Transparency	December 2013
FAD	VAT reform	February 2014
MCM	Capital controls liberalization	May 2014
MCM	Banking supervision	February 2015
MCM	Banking supervision	March 2015
MCM	Stress testing	April 2015
FAD	Workshop on Distributional Effects of Tax Reforms and	April 2015
	Expenditure Measures
MCM	Banking supervision	September 2015
MCM	Banking supervision	March 2016
FAD	Organic Budget Law implementation	April 2016

View Table

Department	Purpose	Date
MCM	Capital account liberalization	March 2010
MCM	Reserves building and liquidity management	June 2010
MCM	Public debt management	July 2010
FAD	Fiscal framework issues	August 2010
MCM	Capital controls liberalization	November 2010
MCM	Converging to EU regulations-credit bureaus	January 2011
MCM	Liquidity management	March 2011
FAD	Tax policy	March 2011
STA	External Sector Statistics	April 2011
FAD	Organic Budget Law	October 2011
FAD	Follow up on Organic Budget Law	May 2012
MCM	Capital account liberalization	March 2013
FAD	IPSAS in Iceland: Towards Enhanced Fiscal Transparency	December 2013
FAD	VAT reform	February 2014
MCM	Capital controls liberalization	May 2014
MCM	Banking supervision	February 2015
MCM	Banking supervision	March 2015
MCM	Stress testing	April 2015
FAD	Workshop on Distributional Effects of Tax Reforms and	April 2015
	Expenditure Measures
MCM	Banking supervision	September 2015
MCM	Banking supervision	March 2016
FAD	Organic Budget Law implementation	April 2016

Statistical Issues

A. Assessment of Data Adequacy for Surveillance
General. Data provision to the Fund is adequate for surveillance purposes. Iceland subscribed to the Special Data Dissemination Standard (SDDS) in 1996, and is in observance of the SDDS specifications for coverage, periodicity, and timeliness, although it uses a flexibility option on the timeliness and periodicity for the production index and the producer price index. Data on a wide range of economic and financial variables are provided to the Fund in a timely manner during and between consultations. In addition to periodic press releases, statistical information in English is disseminated to the public through a range of monthly, quarterly, and annual publications by three main institutions (the CBI, the Ministry of Finance and Economic Affairs, and Statistics Iceland), and is available on their internet sites.
The composition agreements reached by the bank estates in late 2015 had large impacts on the fiscal, monetary, and external sectors. The estates’ “stability contributions” are recorded in the general government data on an accruals basis in 2016. The monetary data have been affected in both 2015 and 2016. In the external sector, the compositions entailed a large step reduction in the estates’ foreign liabilities in December 2015, and a reclassification of their remaining foreign assets and liabilities from “deposit money banks in winding up proceedings” (which no longer exists as a category) to “financial holding companies”—both classified in the balance of payments (BOP) and international investment position (IIP) under “Other sectors – other financial corporations”.
National accounts. The existing methodological framework for producing national accounts data was replaced in September 2014 with the new European System of Accounts (ESA) 2010 and the data starting in 1997 were revised. The expenditure based GDP data are available by component on a quarterly basis. Nonetheless, there is still scope for improvement of the national accounts data: Income accounts by sector are not sufficiently detailed and available only on an annual basis with a significant lag; and Production based GDP or gross value added by industry are available only on an annual basis in nominal terms with a considerable lag.
Collection of the data on construction can be improved, because as of now the data is subject to substantial data revisions, which complicates assessment of quarterly growth.
Price statistics. Data provision is adequate for surveillance.
Government finance statistics. The authorities publish a Treasury cash flow statement on a monthly basis, quarterly data on general government operations, and annual data on general government operations and financial assets and liabilities. Iceland reports government finance statistics in accordance with the Government Financial Statistics Manual (GFSM) 2014 framework in the Government Financial Statistics (GFS) Yearbook, and is an up to date contributor to the International Financial Statistics (IFS).
Monetary and financial statistics. The concepts and definitions broadly conform to the guidelines of the Monetary and Financial Statistics Manual (MFSM). The CBI reports detailed monetary (CBI and deposit money bank) balance sheet data promptly on a monthly frequency.
Financial sector surveillance. Iceland does not report financial soundness indicators to STA.
External sector statistics. Since 2014, the CBI has compiled BOP and IIP data according to the 6th edition of the Balance of Payments and International Investment Position Manual (BPM6). The BoP data do not provide a breakdown of services before 2013.
B. Data Standards and Quality
Subscriber to the SDDS since June 1996. Uses SDDS flexibility options on the periodicity and timeliness of the industrial production index.	A data ROSC was disseminated in November 2005.

View Table

A. Assessment of Data Adequacy for Surveillance
General. Data provision to the Fund is adequate for surveillance purposes. Iceland subscribed to the Special Data Dissemination Standard (SDDS) in 1996, and is in observance of the SDDS specifications for coverage, periodicity, and timeliness, although it uses a flexibility option on the timeliness and periodicity for the production index and the producer price index. Data on a wide range of economic and financial variables are provided to the Fund in a timely manner during and between consultations. In addition to periodic press releases, statistical information in English is disseminated to the public through a range of monthly, quarterly, and annual publications by three main institutions (the CBI, the Ministry of Finance and Economic Affairs, and Statistics Iceland), and is available on their internet sites.
The composition agreements reached by the bank estates in late 2015 had large impacts on the fiscal, monetary, and external sectors. The estates’ “stability contributions” are recorded in the general government data on an accruals basis in 2016. The monetary data have been affected in both 2015 and 2016. In the external sector, the compositions entailed a large step reduction in the estates’ foreign liabilities in December 2015, and a reclassification of their remaining foreign assets and liabilities from “deposit money banks in winding up proceedings” (which no longer exists as a category) to “financial holding companies”—both classified in the balance of payments (BOP) and international investment position (IIP) under “Other sectors – other financial corporations”.
National accounts. The existing methodological framework for producing national accounts data was replaced in September 2014 with the new European System of Accounts (ESA) 2010 and the data starting in 1997 were revised. The expenditure based GDP data are available by component on a quarterly basis. Nonetheless, there is still scope for improvement of the national accounts data: Income accounts by sector are not sufficiently detailed and available only on an annual basis with a significant lag; and Production based GDP or gross value added by industry are available only on an annual basis in nominal terms with a considerable lag.
Collection of the data on construction can be improved, because as of now the data is subject to substantial data revisions, which complicates assessment of quarterly growth.
Price statistics. Data provision is adequate for surveillance.
Government finance statistics. The authorities publish a Treasury cash flow statement on a monthly basis, quarterly data on general government operations, and annual data on general government operations and financial assets and liabilities. Iceland reports government finance statistics in accordance with the Government Financial Statistics Manual (GFSM) 2014 framework in the Government Financial Statistics (GFS) Yearbook, and is an up to date contributor to the International Financial Statistics (IFS).
Monetary and financial statistics. The concepts and definitions broadly conform to the guidelines of the Monetary and Financial Statistics Manual (MFSM). The CBI reports detailed monetary (CBI and deposit money bank) balance sheet data promptly on a monthly frequency.
Financial sector surveillance. Iceland does not report financial soundness indicators to STA.
External sector statistics. Since 2014, the CBI has compiled BOP and IIP data according to the 6th edition of the Balance of Payments and International Investment Position Manual (BPM6). The BoP data do not provide a breakdown of services before 2013.
B. Data Standards and Quality
Subscriber to the SDDS since June 1996. Uses SDDS flexibility options on the periodicity and timeliness of the industrial production index.	A data ROSC was disseminated in November 2005.

Iceland: Table of Common Indicators Required for Surveillance

(As of June 3, 2016)

¹Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

²Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

³Foreign, domestic bank, and domestic nonbank financing.

⁴The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

⁵Including currency and maturity composition.

⁶Includes external gross financial asset and liability positions vis-à-vis nonresidents.

⁷Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

⁸These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.

⁹This reflects the assessment provided in the data ROSC or the Substantive Update (published in November 2005) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

¹⁰Same as footnote 7, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

Iceland: Table of Common Indicators Required for Surveillance

(As of June 3, 2016)

	Date of latest observation	Date received	Frequenc y of Data7	Frequency of Reporting7	Frequency of Publication7	Memorandum Items:8
						Data Quality -Methodological Soundness9	Data Quality -Accuracy and Reliability10
Exchange Rates	June 3, 16	June 3, 16	D and M	D and M	D and M
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1	Apr. 2016	May 9, 16	M	M	M
Reserve/Base Money	Apr. 2016	May 23, 16	M	M	M	LO, O, LO, LO	LO, O, O, O, O
Broad Money	Apr. 2016	May 23, 16	M	M	M
Central Bank Balance Sheet	Apr. 2016	May 9, 16	M	M	M
Consolidated Balance Sheet of the Banking System	Apr. 2016	May 9, 16	M	M	M
Interest Rates2	June 3, 16	June 3, 16	D	D	D
Consumer Price Index	May 2016	May 27, 16	M	M	M	O, O, O, O	O, O, O, O, O
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4	Q4, 2015	Mar. 15, 16	Q	Q	Q	O, LO, O, LO	LO, O, O, O, O
Revenue, Expenditure, Balance and Composition of Financing3 – Central Government	Feb. 2016	May 10, 16	M and Q	M and Q	M and Q
Stocks of Central Government and Central Government-Guaranteed Debt5	Apr. 2016	May 9, 16	M	M	M
External Current Account Balance	Q1, 2016	June 2, 16	Q	Q	Q	O, O, LO, O	LO, O, O, O, O
Exports and Imports of Goods and Services	Q1, 2016	June 2, 16	Q	Q	Q
GDP/GNP	Q4, 2015	Mar. 10, 16	Q	Q	Q	O, LO, O, LO	LO, O, LO, LO, O
Gross External Debt	Q1, 2016	June 2, 16	Q	Q	Q
International Investment Position6	Q1, 2016	June 2, 16	Q	Q	Q

¹Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

²Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

³Foreign, domestic bank, and domestic nonbank financing.

⁴The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

⁵Including currency and maturity composition.

⁶Includes external gross financial asset and liability positions vis-à-vis nonresidents.

⁷Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

⁸These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.

⁹This reflects the assessment provided in the data ROSC or the Substantive Update (published in November 2005) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

¹⁰Same as footnote 7, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

View Table

Iceland: Table of Common Indicators Required for Surveillance

(As of June 3, 2016)

	Date of latest observation	Date received	Frequenc y of Data7	Frequency of Reporting7	Frequency of Publication7	Memorandum Items:8
						Data Quality -Methodological Soundness9	Data Quality -Accuracy and Reliability10
Exchange Rates	June 3, 16	June 3, 16	D and M	D and M	D and M
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1	Apr. 2016	May 9, 16	M	M	M
Reserve/Base Money	Apr. 2016	May 23, 16	M	M	M	LO, O, LO, LO	LO, O, O, O, O
Broad Money	Apr. 2016	May 23, 16	M	M	M
Central Bank Balance Sheet	Apr. 2016	May 9, 16	M	M	M
Consolidated Balance Sheet of the Banking System	Apr. 2016	May 9, 16	M	M	M
Interest Rates2	June 3, 16	June 3, 16	D	D	D
Consumer Price Index	May 2016	May 27, 16	M	M	M	O, O, O, O	O, O, O, O, O
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4	Q4, 2015	Mar. 15, 16	Q	Q	Q	O, LO, O, LO	LO, O, O, O, O
Revenue, Expenditure, Balance and Composition of Financing3 – Central Government	Feb. 2016	May 10, 16	M and Q	M and Q	M and Q
Stocks of Central Government and Central Government-Guaranteed Debt5	Apr. 2016	May 9, 16	M	M	M
External Current Account Balance	Q1, 2016	June 2, 16	Q	Q	Q	O, O, LO, O	LO, O, O, O, O
Exports and Imports of Goods and Services	Q1, 2016	June 2, 16	Q	Q	Q
GDP/GNP	Q4, 2015	Mar. 10, 16	Q	Q	Q	O, LO, O, LO	LO, O, LO, LO, O
Gross External Debt	Q1, 2016	June 2, 16	Q	Q	Q
International Investment Position6	Q1, 2016	June 2, 16	Q	Q	Q

¹Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

²Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

³Foreign, domestic bank, and domestic nonbank financing.

⁴The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

⁵Including currency and maturity composition.

⁶Includes external gross financial asset and liability positions vis-à-vis nonresidents.

⁷Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

⁸These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.

⁹This reflects the assessment provided in the data ROSC or the Substantive Update (published in November 2005) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

¹⁰Same as footnote 7, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.