The 2004 Fiscal Budget 1 October 2003
Treasury revenue balance for 2004 estimated to be ISK 6.4 billion or ¾% of GDP Highlights Net Treasury financing balance for 2004 estimated to be ISK 13.7 billion
Public Finances
Revenue surplus excluding irregular items
Treasury balance shows a year-on-year improvement of ISK 13 billion, reflecting greatly increased restraint in public finances
Medium-term Public Finance Programme National public works cut by ISK 5 billion over the next two years, then increased by the same amount Treasury surplus of at least 1¾% of GDP in 2005 and 1% in 2006 Growth of public consumption slowed Annual growth max. 2% in real terms
Moderate growth in transfer payments Annual rise in transfer expenditure no more than 2½% in real terms Tax cuts of approx. ISK 20 billion Medium-term Public Finance Programme Neither the Norðurál enlargement nor income from sale of assets are included in budget premises
Medium-term Public Finance Programme
Economic assumptions
New period of growth
Price levels remain steady %
Purchasing power grows
Low level of unemployment
Temporary rise in current account deficit
Main assumptions for 2004 Economic growth 3½% Purchasing power increase 2½% Price level rise 2½% Unemployment 2½% Current account deficit 3¼% of GDP ISK Index 125
Budget facts and figures
Treasury expenditure drops in real terms* * Excl. irregular items
Treasury tax revenue almost unchanged
Priority areas Allocations to seniors pensions increase by 17% Increased allocations to education, esp. to universities, upper secondary schools, research and Students Loan Fund Health care allocations increase by 8% Restructuring of research with expansion of research and technology funds
Special measures concerning income and expenditure ISK 1500 million reduction in transfer payments Operating expenditure reduced by ISK 700 million New investment reduced by ISK 1500 million Additional revenue of approx. ISK 1000 million
What has been accomplished?
Treasury debt
Reduced interest expenditure
Additional contribution to Civil Servants Pension Fund, with interest Imputed 5% interest 2003 and 2004
In summary Debt and debt service burden reduced Public finances applied to counter inflationary effects of heavy industrial projects Opening up possibilities for tax cuts Ensuring stability
The Budget itself and accompanying documentation is available on the Ministrys website: