Weekly Web Release from the Ministry of Finance, October 24, 2002.
Weekly Web Release from the Ministry of Finance
October 24, 2002
Treasury finances, January-September
Figures for Treasury finances for the first nine months of 2002 are now available. They are on a cash basis and therefore not comparable to the Treasury accounts or the fiscal budget, both of which are presented on an accruals basis.
The cash deficit from operations amounted to 19.6 billion krónur, compared to a deficit of 6.9 billion krónur at the end of September 2001. This was mostly foreseen in the budget cash flow projection, which estimated the cash deficit at 17 billion krónur, the difference being solely accounted for by less income from the sale of assets than projected earlier. Financial transactions were in surplus by 6.7 billion krónur compared with a deficit of 1.8 billion krónur for the first nine months of 2001. The main difference is due to the sale of shares in Landsbanki of 5 billion krónur. Further, incoming repayments of outstanding claims increased by 3 billion krónur compared to September last year.
12-month change of a 6-month moving average, constant prices
Total revenue amounted to 168 billion krónur, an increase of about 9.8 billion krónur or 6 per cent from last year. Tax revenue increased less, or by 3.9 per cent in nominal terms. The difference stems entirely from increased revenue through the sale of assets. With price increases amounting to 6 per cent during this period this represents a 2 per cent fall in real terms. Taxes on income and profits increased by 3 per cent on last year, somewhat in excess of budget projections. Social security taxes rose by 8S per cent reflecting a 7S per cent increase in wages. Taxes on goods and services rose by 4 per cent in nominal terms, indicating a 2 per cent decline in real terms. Receipts from VAT, however, increased by more than 6 per cent showing, for the first time since early 2001, an increase in real terms.
The developments in Treasury tax revenue in 2002 so far are in line with the economic forecast presented by the Ministry of Finance in early October, which predicted that the recession in the Icelandic economy was coming to an end and a period of modest growth was ahead.
Emigration of Icelandic citizens increasing
Figures for the first nine months of 2002 on population migration are now available. The give an important indication of where the economy is heading. Immigration of foreign nationals has been considerable in recent years. When the demand for labour receded, foreign immigration declined. Experience also shows that Icelanders react to changed economic circumstances by migrating, both domestically as well as between countries.
Migration tends to be predictably seasonal. Figures for the third quarter of this year appear to indicate that emigration has increased and immigration declined from the third quarter of last year. Net emigration in the third quarter came to about 300 persons, the first quarter in four years where the number of emigrants has exceeded the number of immigrants. No significant change is seen in the number of foreign nationals; both their immigration and emigration is expected to decline from last year. Still, their number is expected to increase somewhat more than was predicted in the Ministry's recently released Economic Outlook. The latest figures for the migration of Icelandic citizens merit closer attention. At present it appears that 3,600 Icelandic citizens will emigrate this year which is offset with a greater immigration of Icelanders than estimated earlier. Net migration to Iceland is expected to be unchanged from an earlier estimate, and the net immigration of foreign nationals is expected to be about equal to the net emigration of Icelanders. As for the labour market, migration will probably increase the labour supply.
Foreign immigration is still from the same countries as before; from Poland, the Philippines, Lithuania, Thailand and Yugoslavia. About half of the increase comes from these countries.
The most important migration of Icelanders is to and from the Nordic countries, particularly to Denmark, Norway and Sweden. Half of Icelandic emigrants went to Denmark in the first nine months of this year and close to 80 per cent to the Nordic countries as a whole. Net emigration to Denmark came to about 500 persons. Icelanders emigrating to Denmark may in part be looking for employment, but a large number go there for their advanced education. Applications to the Student Loan Fund for study in Denmark have increased by one-fourth and for study abroad by 6 per cent from the corresponding period in 2001.
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Weekly Web Release, Arnarhvoll, 150 Reykjavik, Iceland