Abstract
ICELAND
Title page
ICELAND
STAFF REPORT FOR THE 2021 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
May 12, 2021
Prepared By
The European Department
(in consultation with other departments)
Contents
FUND RELATIONS
STATISTICAL ISSUES
Fund Relations
(As of March 31, 2021)
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 | 113.10 | 101.14 |
| SDR Department: | SDR Million | Percent of Allocation |
| Net cumulative allocation | 112.18 | 100.00 |
| Holdings | 113.10 | 101.14 |
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):
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Principal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Charges/Interest | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Principal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Charges/Interest | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
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, and the de facto exchange rate arrangement under the IMF classification system is floating. The CBI publishes daily data on its foreign exchange intervention with a lag.
Iceland is an Article VIII member and maintains an exchange system free of restrictions on payments and transfers for current international transactions. Iceland maintains measures adopted for security reasons, which have been notified to the Fund for approval in accordance with the procedures of Decision 144.
Last Article IV Consultation:
Discussions for the 2019 Article IV Consultation were held in Reykjavik during October 30-November 12, 2019. The staff report (Country Report No. 19/375) was considered by the Executive Board on lapse of time basis on December 19, 2019. 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
| I. 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 in the winter of 2015–16 had large impacts on the fiscal, monetary, and external sectors. The estates’ “stability contributions” are recorded in the general government data on an accrual 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”—classified in both the balance of payments (BoP) and the international investment position (IIP) under “Other sectors—other financial corporations.” The reclassification of 24 public sector entities into the definition of general government in 2020 had a large impact on the fiscal accounts (overall deficit, assets and liabilities), which have been revised back to 1998 and remain subject to further revisions. | |
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 data starting in 1997 were revised. In November 2020, the Statistics Iceland published the results of a comprehensive review of the national accounts for the period 1995 to 2019, consistent with agreed policies and guidelines of Eurostat and the Statistical Office of the European Union. The base year was changed to 2015 from 2005. Expenditure-based GDP data are available by component on a quarterly basis. Nonetheless, there is still scope for improvement:
|
|
| Price statistics. Data provision is adequate for surveillance. | |
| Government finance statistics. The authorities publish a treasury cash flow statement monthly, data on general government operations on an accrual basis quarterly and annually, and data on general government financial assets and liabilities annually. Iceland reports government finance statistics in accordance with the Government Finance Statistics Manual 2014 framework in the Government Finance Statistics Yearbook and is an up-to-date contributor to the International Financial Statistics. New series (1998 to 2020) are expected to be submitted for the annual GFS database based on the reclassification of 24 public sector entities into the general government as published by Statistics Iceland in December 2020. | |
| Monetary and financial statistics. The concepts and definitions conform to the guidelines of the Monetary and Financial Statistics Manual. The monetary and financial statistics (MFS) are reported to STA at a monthly frequency. Iceland reports the standardized report forms (SRFs) 1SR for central bank and 2SR for other depository corporations for publication in the International Financial Statistics. Iceland also reports data on some key series and indicators of the Financial Access Survey (FAS), including gender disaggregated data on the use of financial services and two indicators of the United Nations Sustainable Development Goals. | |
| Financial sector surveillance. Iceland reports quarterly financial soundness indicators to STA, with data starting from Q1:2014. | |
| 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 BoP and the IIP. The BoP data do not provide a breakdown of services before 2009. | |
| II. 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. |
| I. 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 in the winter of 2015–16 had large impacts on the fiscal, monetary, and external sectors. The estates’ “stability contributions” are recorded in the general government data on an accrual 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”—classified in both the balance of payments (BoP) and the international investment position (IIP) under “Other sectors—other financial corporations.” The reclassification of 24 public sector entities into the definition of general government in 2020 had a large impact on the fiscal accounts (overall deficit, assets and liabilities), which have been revised back to 1998 and remain subject to further revisions. | |
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 data starting in 1997 were revised. In November 2020, the Statistics Iceland published the results of a comprehensive review of the national accounts for the period 1995 to 2019, consistent with agreed policies and guidelines of Eurostat and the Statistical Office of the European Union. The base year was changed to 2015 from 2005. Expenditure-based GDP data are available by component on a quarterly basis. Nonetheless, there is still scope for improvement:
|
|
| Price statistics. Data provision is adequate for surveillance. | |
| Government finance statistics. The authorities publish a treasury cash flow statement monthly, data on general government operations on an accrual basis quarterly and annually, and data on general government financial assets and liabilities annually. Iceland reports government finance statistics in accordance with the Government Finance Statistics Manual 2014 framework in the Government Finance Statistics Yearbook and is an up-to-date contributor to the International Financial Statistics. New series (1998 to 2020) are expected to be submitted for the annual GFS database based on the reclassification of 24 public sector entities into the general government as published by Statistics Iceland in December 2020. | |
| Monetary and financial statistics. The concepts and definitions conform to the guidelines of the Monetary and Financial Statistics Manual. The monetary and financial statistics (MFS) are reported to STA at a monthly frequency. Iceland reports the standardized report forms (SRFs) 1SR for central bank and 2SR for other depository corporations for publication in the International Financial Statistics. Iceland also reports data on some key series and indicators of the Financial Access Survey (FAS), including gender disaggregated data on the use of financial services and two indicators of the United Nations Sustainable Development Goals. | |
| Financial sector surveillance. Iceland reports quarterly financial soundness indicators to STA, with data starting from Q1:2014. | |
| 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 BoP and the IIP. The BoP data do not provide a breakdown of services before 2009. | |
| II. 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 March 31, 2021)
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 March 31, 2021)
| 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 | Mar. 2021 | Mar. 2021 | D and M | D and M | D and M | ||
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | Feb. 2021 | Apr. 2021 | M | M | M | ||
| Reserve/Base Money | Feb. 2021 | Mar. 2021 | M | M | M | LO, O, LO, LO | LO, O, O, O, O |
| Broad Money | Mar. 2021 | Apr. 2021 | M | M | M | ||
| Central Bank Balance Sheet | Mar. 2021 | Apr. 2021 | M | M | M | ||
| Consolidated Balance Sheet of the Banking System | Mar. 2021 | Apr. 2021 | M | M | M | ||
| Interest Rates2 | March 29, 2021 | March 29, 2021 | D | D | D | ||
| Consumer Price Index | Mar. 2021 | Mar. 2021 | M | M | M | O, O, O, O | O, O, O, O, O |
| Revenue, Expenditure, Balance and Composition of Financing3 – General Government4 | Q4, 2020 | Mar. 2021 | Q | Q | Q | O, LO, O, LO | LO, O, O, O, O |
| Revenue, Expenditure, Balance and Composition of Financing3– Central Government | Q4, 2020 | Mar. 2021 | Q | Q | Q | ||
| Stocks of Central Government and Central Government-Guaranteed Debt5 | Mar. 2021 | Apr. 2021 | M | M | Q | ||
| External Current Account Balance | Q4, 2020 | Mar. 2021 | Q | Q | Q | O, O, LO, O | LO, O, O, O, O |
| Exports and Imports of Goods and Services | Q4, 2020 | Feb. 2021 | Q | Q | Q | ||
| GDP/GNP | Q4, 2020 | Feb. 2021 | Q | Q | Q | O, LO, O, LO | LO, O, LO, LO, O |
| Gross External Debt | Q4, 2020 | Apr. 2021 | Q | Q | Q | ||
| International Investment Position6 | Q4, 2020 | Mar. 2021 | 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 March 31, 2021)
| 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 | Mar. 2021 | Mar. 2021 | D and M | D and M | D and M | ||
| International Reserve Assets and Reserve Liabilities of the Monetary Authorities1 | Feb. 2021 | Apr. 2021 | M | M | M | ||
| Reserve/Base Money | Feb. 2021 | Mar. 2021 | M | M | M | LO, O, LO, LO | LO, O, O, O, O |
| Broad Money | Mar. 2021 | Apr. 2021 | M | M | M | ||
| Central Bank Balance Sheet | Mar. 2021 | Apr. 2021 | M | M | M | ||
| Consolidated Balance Sheet of the Banking System | Mar. 2021 | Apr. 2021 | M | M | M | ||
| Interest Rates2 | March 29, 2021 | March 29, 2021 | D | D | D | ||
| Consumer Price Index | Mar. 2021 | Mar. 2021 | M | M | M | O, O, O, O | O, O, O, O, O |
| Revenue, Expenditure, Balance and Composition of Financing3 – General Government4 | Q4, 2020 | Mar. 2021 | Q | Q | Q | O, LO, O, LO | LO, O, O, O, O |
| Revenue, Expenditure, Balance and Composition of Financing3– Central Government | Q4, 2020 | Mar. 2021 | Q | Q | Q | ||
| Stocks of Central Government and Central Government-Guaranteed Debt5 | Mar. 2021 | Apr. 2021 | M | M | Q | ||
| External Current Account Balance | Q4, 2020 | Mar. 2021 | Q | Q | Q | O, O, LO, O | LO, O, O, O, O |
| Exports and Imports of Goods and Services | Q4, 2020 | Feb. 2021 | Q | Q | Q | ||
| GDP/GNP | Q4, 2020 | Feb. 2021 | Q | Q | Q | O, LO, O, LO | LO, O, LO, LO, O |
| Gross External Debt | Q4, 2020 | Apr. 2021 | Q | Q | Q | ||
| International Investment Position6 | Q4, 2020 | Mar. 2021 | 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.