Seðlabanki

Balance of payments in the first quarter of 2016 and the international investment position

The Central Bank of Iceland has published on its website the preliminary statistics for the balance of payments in the first quarter of 2016, and for the external position at the end of the quarter.

The current account balance was positive by 2.1 b.kr. during the quarter, as opposed to a positive balance of 7.8 b.kr. in the preceding quarter. The balance on goods trade was negative by 25.6 b.kr., while the balance on services trade was positive by 26.9 b.kr. The balance on primary income was positive by 5.4 b.kr., whereas secondary income was negative in the amount of 4.5 b.kr. The impact of the deposit money banks in winding-up proceedings on the primary income balance is negligible following the approval of their composition agreements last December.

Foreign assets totalled 4,215 b.kr. at the end of the quarter, while foreign liabilities totalled 4,347 b.kr. The net position is therefore negative by 131 b.kr., or 5.9% of GDP. Net liabilities increased between quarters by 4 b.kr., or 0.2% of GDP. During the quarter, the deposit money banks in winding-up proceedings made cash distributions to their creditors and also issued debt and equity securities in the companies and distributed these to creditors. At the end of the quarter, their debt totalled 598 b.kr., which will be paid later, as asset sales move forwards. The valuation of the companies’ liabilities as of end-2015 has been revised since the last publication. The liabilities are now presented at market value instead of nominal value, as was done previously. This presentation better reflects the amount that is estimated to be distributed to creditors. The impact of this is an improvement in the external position of the economy as of year-end 2015 in the amount of 172 b.kr., or 8.8% of GDP.

Net financial transactions deteriorated the international investment position by approximately 14 b.kr. There off foreign assets declined by 528 b.kr. and foreign liabilities by 514 b.kr. as a result of the transactions. Exchange rate movements and price changes had a negative impact on the external position in the amount of 103 b.kr. during the quarter. The króna depreciated against most major currencies during the quarter, or by 1.6% in terms of the trade-weighted index.

No.12/2016
2 June 2016