Abstract
2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Iceland
Fund Relations
(As of April 30, 2017)
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 |
| 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 |
| SDR Department: | SDR Million | Percent of Allocation |
|---|---|---|
| Net cumulative allocation | 112.18 | 100.00 |
| Holdings | 111.78 | 99.64 |
| SDR Department: | SDR Million | Percent of Allocation |
|---|---|---|
| Net cumulative allocation | 112.18 | 100.00 |
| Holdings | 111.78 | 99.64 |
Outstanding Purchases and Loans: None.
Latest Financial Arrangements:
| Type | Approval Date | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (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 |
| Type | Approval Date | Expiration Date | Amount Approved (SDR Million) | Amount Drawn (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):
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Principal | |||||
| Charges/Interest | 0.00 | 0.01 | 0.01 | 0.01 | 0.01 |
| Total | 0.00 | 0.01 | 0.01 | 0.01 | 0.01 |
| 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|
| Principal | |||||
| Charges/Interest | 0.00 | 0.01 | 0.01 | 0.01 | 0.01 |
| Total | 0.00 | 0.01 | 0.01 | 0.01 | 0.01 |
Implementation of HIPC Initiative: Not applicable.
Implementation of Multilateral Debt Relief Initiative (MDRI): Not applicable.
Implementation of Catastrophe Containment and Relief (CCR): Not applicable.
Exchange Rate Arrangement and Exchange Restrictions:
The de jure exchange rate arrangement is free floating. In 2016, the Central Bank of Iceland (CBI) continued to follow a strategy of significant foreign exchange intervention as set forth by the Monetary Policy Committee in May 2013. The objective of the intervention strategy is to mitigate short-term exchange rate volatility and to grow the CBI’s reserves as conditions permit. Exchange rate volatility diminished significantly after the strategy was announced. The CBI publishes monthly data on its interventions in the foreign exchange market. CBI transactions accounted for around 55 percent of total exchange market turnover in 2016, significantly higher than in 2015. The de facto exchange rate arrangement is classified as a floating arrangement.
Iceland has accepted the obligations under Article VIII, Sections 2(a), 3, and 4 and maintains no exchange restrictions subject to Fund jurisdiction under Article VIII, Section 2(a). The previously identified exchange restrictions arising from limitations on the conversion and transfer of (i) interest on bonds which the foreign exchange rules apportioned depending on the period of the holding, (ii) amortized principal on bonds, and (ii) the indexed portion of the principal on bonds were removed by force of legislative amendments passed in October 2016 and May 2017. Iceland continues to maintain certain measures that constitute exchange restrictions imposed for security reasons based on UN Security Council Resolutions.
Safeguards Assessment:
Iceland repaid all credit outstanding ahead of schedule in October 2015. The CBI is no longer subject to safeguards monitoring.
Last Article IV Consultation:
Discussions for the 2016 Article IV Consultation were held in Reykjavik during March 30–April 12, 2016. The Staff Report (Country Report No. 16/179) was considered by the Executive Board on June 20, 2016. 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 Expenditure Measures | April 2015 |
| MCM | Banking supervision | September 2015 |
| MCM | Banking supervision | March 2016 |
| FAD | Organic Budget Law implementation | April 2016 |
| 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 Expenditure Measures | April 2015 |
| 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. The composition agreements reached by the bank estates around 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 2010 and the data starting in 1997 were revised. Expenditure based GDP data are available by component on a quarterly basis. Nonetheless, there is still scope for improvement of the national accounts data:
|
|
| Price statistics. Data provision is adequate for surveillance. | |
| Government finance statistics. The authorities publish a monthly Treasury cash flow statement, 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 2014 framework in the Government Financial Statistics Yearbook, and is an up to date contributor to the International Financial Statistics. | |
| Monetary and financial statistics. The concepts and definitions conform to the guidelines of the Monetary and Financial Statistics Manual. The CBI reports detailed monetary (CBI and deposit money bank) balance sheet data promptly at 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. Data were back-cast to 1995 for both the balance of payments and the IIP. BoP data do not provide a breakdown of services before 2013. | |
| B. Data Standards and Quality | |
| Subscriber to the Special Data Dissemination Standard (SDDS) since June 1996. Uses SDDS flexibility options on the periodicity and timeliness of the industrial production index. | A Report on the Observation of Standards and Codes data module was published in November 2005. |
| A. Assessment of Data Adequacy for Surveillance | |
| General. Data provision to the Fund is adequate for surveillance purposes. The composition agreements reached by the bank estates around 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 2010 and the data starting in 1997 were revised. Expenditure based GDP data are available by component on a quarterly basis. Nonetheless, there is still scope for improvement of the national accounts data:
|
|
| Price statistics. Data provision is adequate for surveillance. | |
| Government finance statistics. The authorities publish a monthly Treasury cash flow statement, 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 2014 framework in the Government Financial Statistics Yearbook, and is an up to date contributor to the International Financial Statistics. | |
| Monetary and financial statistics. The concepts and definitions conform to the guidelines of the Monetary and Financial Statistics Manual. The CBI reports detailed monetary (CBI and deposit money bank) balance sheet data promptly at 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. Data were back-cast to 1995 for both the balance of payments and the IIP. BoP data do not provide a breakdown of services before 2013. | |
| B. Data Standards and Quality | |
| Subscriber to the Special Data Dissemination Standard (SDDS) since June 1996. Uses SDDS flexibility options on the periodicity and timeliness of the industrial production index. | A Report on the Observation of Standards and Codes data module was published in November 2005. |
Iceland: Table of Common Indicators Required for Surveillance
(As of May 15, 2017)
Any 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.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.
This 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).
Same 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 May 15, 2017)
| Date of latest observation | Date received | Frequency of Data7 | Frequency of Reporting7 | Frequency of Publication7 | Memorandum Items:8 | ||
|---|---|---|---|---|---|---|---|
| Data Quality – Methodological Soundness9 | Data Quality – Accuracy and Reliability10 | ||||||
| Exchange Rates | May 15, 2017 | May 15, 2017 | D and M | D and M | D and M | ||
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | March 2017 | April 2017 | M | M | M | ||
| Reserve/Base Money | March 2017 | April 2017 | M | M | M | LO, O, LO, LO | LO, O, O, O, O |
| Broad Money | March 2017 | April 2017 | M | M | M | ||
| Central Bank Balance Sheet | April 2017 | May 2017 | M | M | M | ||
| Consolidated Balance Sheet of the Banking System | March 2017 | April 2017 | M | M | M | ||
| Interest Rates2 | May 15, 2017 | May 15, 2017 | D | D | D | ||
| Consumer Price Index | March 2017 | April 2017 | M | M | M | O, O, O, O | O, O, O, O, O |
| Revenue, Expenditure, Balance and Composition of Financing3 – General Government4 | Q4, 2016 | March 2017 | Q | Q | Q | O, LO, O, LO | LO, O, O, O, O |
| Revenue, Expenditure, Balance and Composition of Financing3– Central Government | Q4, 2016 | March 2017 | M and Q | M and Q | M and Q | ||
| Stocks of Central Government and Central Government-Guaranteed Debt5 | Q3, 2016 | Dec. 2016 | M | M | M | ||
| External Current Account Balance | Q4, 2016 | March 2017 | Q | Q | Q | O, O, LO, O | LO, O, O, O, O |
| Exports and Imports of Goods and Services | Q4, 2016 | March 2017 | Q | Q | Q | ||
| GDP/GNP | Q4, 2016 | March 2017 | Q | Q | Q | O, LO, O, LO | LO, O, LO, LO, O |
| Gross External Debt | Q4, 2016 | March 2017 | Q | Q | Q | ||
| International Investment Position6 | Q4, 2016 | March 2017 | Q | Q | Q | ||
Any 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.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.
This 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).
Same 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 May 15, 2017)
| Date of latest observation | Date received | Frequency of Data7 | Frequency of Reporting7 | Frequency of Publication7 | Memorandum Items:8 | ||
|---|---|---|---|---|---|---|---|
| Data Quality – Methodological Soundness9 | Data Quality – Accuracy and Reliability10 | ||||||
| Exchange Rates | May 15, 2017 | May 15, 2017 | D and M | D and M | D and M | ||
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | March 2017 | April 2017 | M | M | M | ||
| Reserve/Base Money | March 2017 | April 2017 | M | M | M | LO, O, LO, LO | LO, O, O, O, O |
| Broad Money | March 2017 | April 2017 | M | M | M | ||
| Central Bank Balance Sheet | April 2017 | May 2017 | M | M | M | ||
| Consolidated Balance Sheet of the Banking System | March 2017 | April 2017 | M | M | M | ||
| Interest Rates2 | May 15, 2017 | May 15, 2017 | D | D | D | ||
| Consumer Price Index | March 2017 | April 2017 | M | M | M | O, O, O, O | O, O, O, O, O |
| Revenue, Expenditure, Balance and Composition of Financing3 – General Government4 | Q4, 2016 | March 2017 | Q | Q | Q | O, LO, O, LO | LO, O, O, O, O |
| Revenue, Expenditure, Balance and Composition of Financing3– Central Government | Q4, 2016 | March 2017 | M and Q | M and Q | M and Q | ||
| Stocks of Central Government and Central Government-Guaranteed Debt5 | Q3, 2016 | Dec. 2016 | M | M | M | ||
| External Current Account Balance | Q4, 2016 | March 2017 | Q | Q | Q | O, O, LO, O | LO, O, O, O, O |
| Exports and Imports of Goods and Services | Q4, 2016 | March 2017 | Q | Q | Q | ||
| GDP/GNP | Q4, 2016 | March 2017 | Q | Q | Q | O, LO, O, LO | LO, O, LO, LO, O |
| Gross External Debt | Q4, 2016 | March 2017 | Q | Q | Q | ||
| International Investment Position6 | Q4, 2016 | March 2017 | Q | Q | Q | ||
Any 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.
Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
Foreign, domestic bank, and domestic nonbank financing.
The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
Including currency and maturity composition.
Includes external gross financial asset and liability positions vis-à-vis nonresidents.
Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
These columns should only be included for countries for which Data ROSC (or a Substantive Update) has been published.
This 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).
Same 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.
When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.