05.06.2003

Balance of payments and external position in the first quarter of 2003

The deficit on Iceland's current account in the first quarter of 2003 amounted to one billion kr. according to preliminary figures from the Central Bank. At the same time in 2002 the current account deficit was 1.5 b.kr. There was a 6.7 b.kr. surplus on the balance of goods but a 2.7 b.kr. deficit on the balance of services. Measured at fixed prices[1] exports of goods and services increased by 5% while imports grew by 5.7% from the same period the previous year. The deficit on the balance on income was 4.6 b.kr. in the first quarter of 2003 compared with a 6 b.kr. deficit in the same period last year and current transfer was negative by 0.4 b.kr.

 

Capital inflow measured 14.1 b.kr. during the first quarter of the year. External borrowing was 23.5 b.kr. and direct inward investment 6.6 b.kr. Capital outflows in connection with portfolio investment amounted to 7.3 b.kr. Other investments amounted to 6.4 b.kr., in particular in the form of lending by Icelandic banks to foreign entities, which has grown sharply in recent years, and the outstanding loan stock currently stands at 73 b.kr. The Central Bank's foreign reserves increased slightly during the first quarter to amount to 36 b.kr. at the end of March.

Balance of payments in b.kr.

Quarter:

I

II

III

IV

I

2002

2002

2002

2002

2003

Current Account

-1.5

-1.8

2.6

-0.1

-1.0

   Exports of goods and services

76.3

78.9

80.1

73.0

70.8

   Imports of goods and services

-71.4

-75.5

-75.4

-71.1

-66.8

   Income and current transfer, net

-6.4

-5.2

-2.1

-1.9

-5.0

Capital and Financial Account

15.9

11.9

-8.7

-4.8

14.1

    Financial account excl. reserves

16.8

14.0

5.0

-15.8

14.3

    Reserve assets (- increase)

-0.9

-2.1

-13.6

11.0

-0.2

Net errors and omissions

-14.3

-10.1

6.1

4.9

-13.2

Iceland's net international investment position was negative by 554.5 b.kr. at the end of March and had decreased since the beginning of the year on account of the appreciation of the króna. Detailed information on the balance of payments and external position is presented in the attached tables along with revised statistics for the past two years. The figure for direct investment abroad has been revised downwards with updated statistics and a review of reinvested earnings. The adjusted figure reduces the balance on income and thereby the balance on the current account. After this revision, there was an 0.8 b.kr. deficit on the current account in 2002 instead of the surplus of just over 2 b.kr. previously reported. The net external position is also affected by the revision and was negative by 562.5 b.kr. at the end of 2002 and by 586.4 b.kr. at the end of 2001.

 

On Tuesday, June 10 2003 the Central Bank will publish tables showing the balance of payments and external position on the Statistics page of its website (www.sedlabanki.is). A new overview of Iceland's external debt will also be presented in accordance with the IMF's Special Data Dissemination Standard (see the IMF website: http://dsbb.imf.org). External debt will be broken down classified in this overview by main creditors, by maturity (short-term and long-term) on an original maturity basis and by instrument.

 

For further information contact Jakob Gunnarsson, Division Chief at the Statistics Department of the Central Bank of Iceland, tel. (+355)569-9600.

 

[1] The trade-weighted exchange rate index was 11.5% lower during the first quarter of 2003 than in the same period the previous year.

 

 

7/2003

5 June 2003

 

The press release with tables (pdf-file, 132 kb)

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