Excerpts from the Ministry's Weekly Web Release February 28, 2002.

Excerpts from the Ministry of Finance's Weekly Web Release
February 28, 2002

The trade deficit continues to shrink
According to recent figures from Statistics Iceland, the trade deficit last year amounted to 6.7 billion kronur, compared to a 45S billion deficit the year before based on the same exchange rate. The deficit last year was also much smaller than generally anticipated in projections.

The trade surplus from the contraction period of 1993-1995 gradually turned into a deficit in the upswing that started in 1996 and reached its peak at the beginning of last year. From then on, the deficit has shrunk rapidly and figures for January show that it has almost disappeared. The main explanation for this favourable development is that while imports declined by almost 10% between 2000 and 2001 based on a fixed exchange rate, exports increased by almost the same proportion based on a fixed exchange rate and by almost one-third in nominal terms. The decline in imports is especially noticeable in consumer goods where car imports have declined by almost 50%. In addition, imports of general investment goods declined by about 15%. Figures for January, showing more than a 5 billion kronur current account surplus, further confirm this development. Imports continue to decline while exports increase.

According to these figures, the current account deficit for 2001 is expected to be close to 40 billion kronur, or up to 10 billion kronur lower than projected. As a comparison, the current account deficit in 2000 was 67 billion kronur. Furthermore, the current account deficit in 2002 is expected to be about 25 billion kronur, or 15 billion lower than anticipated in the latest projections. This outcome reflects the tremendous shift that has taken place in the economy over a relatively short period and demonstrates how the economy is fast heading towards better equilibrium.

A temporary suspension from duties
Recent public discussion has raised questions of the implications involved when a government agency manager or another official is suspended temporarily from duties. The rules that apply will therefore be explained here briefly.

Managers of government agencies carry a special responsibility for the operations of the agency that they govern, cf. Paragraph 2 of Article 38 of the Government Employees Act No. 70/1996. The responsibility concerns the agency's respective operations as well as its management, i.e. finances and accounts. A manager is suspended temporarily from duties when it is considered certain or there is good reason to believe that the agency's accounts or finances are not in order. In case of a charge of misconduct relating to other matters, e.g. the respective operations of an agency, a manager may not be suspended temporarily unless he has been reprimanded before for the same or similar conduct. When a manager is charged with serious misconduct, regarding e.g. the management of an agency, the relevant government minister, with the aid of his ministry, is to decide which disciplinary measure to apply. If a manager is suspended temporarily from duties, his case must be sent to specialist committee forthwith. The committee investigates the matter and decides whether the charge of misconduct is well founded. The committee then concludes its duties with a reasoned opinion of whether it was right to suspend the manager in question temporarily from duties. If the opinion is in the affirmative, the manager shall be removed permanently from his post. During temporary suspension from duties, the manager in question receives half of the basic pay of his post. If he is asked to take up his former position, he is regarded as having served that position without interruption and the pay withheld is paid back in full.

The exemplary government agency in 2002
The Ministry of Finance has decided to nominate an exemplary government agency for the fourth time. The nomination is part of a strategy to improve the operations of government agencies and their services to the public and domestic companies. Previous winners are Kvennaskolinn, Higher Secondary School (1996), the Sudurnes Regional Office for People with Learning Difficulties (1998), and the State Land Reclamation Service (2000). Factors determining the nomination include strategy formulation, financial management, quality of service, human resources management and processes. The Ministry of Finance has requested nominations from ministries and invited agencies to come forward with supporting arguments. The public is also invited to nominate government agencies on the Net until March 8th.


For comments and/or suggestions, send e-mail to:
"bolli.thor.bollason@fjr.stjr.is"
or contact the Ministry of Finance,
Weekly Web Release, Arnarhvoll, 150 Reykjavik, Iceland