Iceland’s debt is equal to 78% of its GDP, according to a press release from the Ministry of Finance.
Providing some background, the release states that “Following the collapse of the banks, the total debt of the Treasury increased from 310 billion krónur in 2007 to 1,176 billion krónur at the end of 2009. The total debt of the Treasury thus amounted to 78 per cent of GDP at the end of 2009.”
However, the ministry contends that debt will begin declining this year, and that the budget will be in balance by 2012. Furthermore, the budget will start moving into surplus territory the year after that. This is according to the medium-term program for fiscal finances presented to the Alþingi last autumn.
The ministry also notes that “it is important to view the source of the increase in debt. Most of the increase is due to investments in assets that mirror the debt accumulation. The foreign debt of the Treasury thus amounted to 356 billion krónur at the end of 2009, but this amount is offset by 281 billion krónur in foreign exchange reserves. Net foreign debt thus amounts to 75 billion krónur,” or just over 400 million euros.
The release can be read in full and in English on the ministry’s website, here.