1. 2 0 0 42 0 0 4 The 2004 Fiscal Budget 1 October 2003

2. 2 0 0 42 0 0 4 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

3. 2 0 0 42 0 0 4 Public Finances 2002-2004

4. 2 0 0 42 0 0 4 Revenue surplus excluding irregular items

5. 2 0 0 42 0 0 4 Treasury balance shows a year-on-year improvement of ISK 13 billion, reflecting greatly increased restraint in public finances

6. 2 0 0 42 0 0 4 Medium-term Public Finance Programme 2005-2007 National public works cut by ISK 5 billion over the next two years, then increased by the same amount 2007-2008 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

7. 2 0 0 42 0 0 4 Moderate growth in transfer payments ­Annual rise in transfer expenditure no more than 2½% in real terms Tax cuts of approx. ISK 20 billion 2005-2007 Medium-term Public Finance Programme 2005-2007 Neither the Norðurál enlargement nor income from sale of assets are included in budget premises

8. 2 0 0 42 0 0 4 Medium-term Public Finance Programme 2005-2007

9. 2 0 0 42 0 0 4 Economic assumptions

10. 2 0 0 42 0 0 4 New period of growth

11. 2 0 0 42 0 0 4 Price levels remain steady %

12. 2 0 0 42 0 0 4 Purchasing power grows

13. 2 0 0 42 0 0 4 Low level of unemployment

14. 2 0 0 42 0 0 4 Temporary rise in current account deficit

15. 2 0 0 42 0 0 4 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

16. 2 0 0 42 0 0 4 Budget facts and figures

17. 2 0 0 42 0 0 4 Treasury expenditure drops in real terms* * Excl. irregular items

18. 2 0 0 42 0 0 4 Treasury tax revenue almost unchanged

19. 2 0 0 42 0 0 4 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

20. 2 0 0 42 0 0 4 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

21. 2 0 0 42 0 0 4 What has been accomplished?

22. 2 0 0 42 0 0 4 Treasury debt

23. 2 0 0 42 0 0 4 Reduced interest expenditure

24. 2 0 0 42 0 0 4 Additional contribution to Civil Servants Pension Fund, with interest Imputed 5% interest 2003 and 2004

25. 2 0 0 42 0 0 4 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 2005- 2007 Ensuring stability

26. 2 0 0 42 0 0 4 The Budget itself and accompanying documentation is available on the Ministrys website: www.ministryoffinance.is