Total Treasury debt at the end of 2009 corresponded to 78 percent of GDP.
Key points:
Net Treasury debt (i.e. debt less financial assets) amounted to 39 percent of GDP at the same time.
Substantial assets in financial and energy concerns offset the net debt of the Treasury.
The Minister of Finance recently approved a policy on debt management for the Treasury up to the year 2014.
The Treasury‘s liquid asset position is sound and will meet repayments into next year.
Prospects for Treasury borrowing are good.
In recent days, there has been some discussion of the debt of the Treasury and its debt management. For this reason, the Ministry of Finance wishes to provide the following information regarding the debt position and its development.
Following the collapse of the banks, the total debt of the Treasury increased from 310 billion kronur in 2007 to 1,176 billion kronur at the end of 2009. The total debt of the Treasury thus amounted to 78 percent of GDP at the end of 2009.
According to the medium-term programme for fiscal finances presented to the Althingi last autumn, the total Treasury finances are projected to be in balance by 2012 and in surplus in 2013. According to the programme, debt will begin declining as of and including next year.
In viewing the development of the debt position, 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 kronur at the end of 2009, but this amount is offset by 281 billion kronur in foreign exchange reserves. Net foreign debt thus amounts to 75 billion kronur.
Debt arising from the reconstitution of the banking system amounts to 186 billion kronur. This amount is offset by the corresponding ownership of capital and credits to the banks.
Debt in the domestic market amounts to 625 billion kronur, against which Treasury deposits with the Central Bank amount to 164 billion kronur.
The Treasury has applied active debt management in the finances of the Treasury and follows a debt management policy that was drawn up last year in co-operation with experts from the International Monetary Fund and other foreign and domestic experts. The policy outlines the aims and criteria for debt management for the next several years. The liquid position of the Treasury is strong, and Treasury deposits with the Central Bank amounted to 164 billion kronur at the end of last year. The Treasury can therefore refinance 130 billion in loans that mature this year. The financing needs of the Treasury due to deficits have been fully met in the domestic bond market, indicating the faith that domestic investors have in the Treasury.
The table below shows the assets and debt of the Treasury at the end of 2009. Treasury debt is divided into domestic and foreign debt. Financial assets consist of loans extended and deposits.
Debt 2009 GDP
Domestic debt
– Market securities 439
– Bank refinancing 186
– Other domestic debt 195
Foreign debt
– Foreign debt 356
Total debt 1.176 78%
Assets
Deposits and loans
extended 596 40%
Net debt 580 39%
(Ministry of Finance press release)
“Following the collapse of the banks, the total debt of the Treasury increased from 310 billion kronur in 2007 to 1,176 billion kronur at the end of 2009.” Wow, that is an inbelievable increase in debt! That’s only %400 in only two years.
And one comment above made a good point that if your currency is worth nothing in the exchange, then you basically have no money outside of your country. But hey, what a better time to buy currency? When it is worth nothing already and the only way it can go is up!
I wonder if there is any country on the planey that is not indebt. If there isn’t, I don’t understand how that is possible, haha.
[…] Icelandic Ministry of Finance releases treasury debt details […]
[…] Icelandic Ministry of Finance releases treasury debt details […]
Then you would need to know how much was in the kitty in Nov 2008 to get a clearer picture.
Present Reserves USD 2.5bn IMF loan USD 2.1bn
However big brother (the IMF) records reserves of ca USD 3.5bn
http://www.imf.org/external/np/sta/ir/isl/eng/curisl.htm
As you appear to be a keen student, a short overview here gives an account and comparison with other countries to the end of 2007
http://www.seðlabanki.is/lisalib/getfile.aspx?itemid=6315
Knowless,
Thx for your comment.
It is an interesting question: is the 281 billion kr. the remains of the IMF loan?
I really would like to know this,and the following question would be: how much of the IMF loan has been spent and for what purpose?
Niels says:
March 17, 2010 at 8:55 pm
“Frankly, my only source is this article so I do not know the methodology behind this but these figures are not clear to me.
For instance, the total debt is supposedly 1,176 billion kronur at the end of 2009.
Has the Icesave debt been a part of this?If I calculate very roughly that would be something like 700 billion krona.”
The Icesave debt does not appear to be accounted for here.
Probably looking at something around a total 110% of GDP in debt.
“If there is just 281 billion kr. in foreign currency reserves that does not seem to be very much”
Considering the foreign reserves were cleaned out by Nov 2008, it’s not too bad.
Are they not the borrowed reserves, banked (not spent) from the IMF loan?
Frankly, my only source is this article so I do not know the methodology behind this but these figures are not clear to me.
For instance, the total debt is supposedly 1,176 billion kronur at the end of 2009.
Has the Icesave debt been a part of this?If I calculate very roughly that would be something like 700 billion krona.
If there is just 281 billion kr. in foreign currency reserves that does not seem to be very much , especially since many bonds are maturing in 2011 and need to be paid out.
“The Treasury has applied active debt management in the finances of the Treasury”
What does this actually mean? I get very suspicious when a chronically endebted party talks about “active debt management”.
“The liquid position of the Treasury is strong,”
Really? there might be a lot of krona in the treasury but foreign reserves are just 281 billion and that is waht matters. The kronur is practically dead.
“The financing needs of the Treasury due to deficits have been fully met in the domestic bond market, indicating the faith that domestic investors have in the Treasury.”
And how about the INTERNATIONAL bonds which need to be repaid ?(sorry for the caps:-))
So the figures which are presented seem favourable but what are they really worth?
Dear Alex and Icesave moderators.
You are letting through ALL CAPS posts again. You know what that means for the quality of debating here in the threads where ALL CAPS is let through.
The problem is not about how much money you owe, the matter is how much money you make and have in store to pay your debts…
UK has POUNDS, ONE OF THE STRONGEST CURRENCIES IN THE WORLD.
ICELAND has ICELANDIC KRONURS, WICH IN FACT HAS NO VALUE AT ALL IN THE INTERNATIONAL MARKET. WICH LITERALLY MEANS THIS:
ICELAND HAS NO MONEY TO PAY!!
BROMLEY, I THINK YOU EASILY FORGET, MOST OF THE TIMES, THE FACT THAT ICELAND IS RUNNING REALLY SHORT IN FOREIGN CURRENCY.
ALL THE NUMBERS THAT ARE POSTED HERE DO NOT MEAN ANYTHING AT ALL, UNTIL THE COUNTRY COUNTS WITH A SUBSTANTIAL RESERVE/BASKET IN FOREIGN CURRENCY. UNTIL THAT DOES NOT HAPPEN ALL NUMBERS ABOUT ICELANDIC HAS THE SAME VALUE AND MEANING AS THE ICELANDIC KRONA…
JUST TOILET PAPER…
well, not as bleak as we all thought it would be… I checked with the IMF data, which is quite interesting. 2009 Statiostics for debt to GDP for following coun tires:
Italy-115.8%
Germany-78.7%
France-78%
USA-84.8%
UK-68.7% (IMF predicts 81.7% for 2010)
Canada-78.2%
Japan-218.6%.
Looks like Iceland is with 78%, if this is correct, not that bad in shape, considering what has happened here and how often we were declared bancrupt and finished. The Euro would have burried us if we had have him already:-) the weak Krona was helping a lot because we have eversince, also throughout the crisis, a export surplus, and that helps if yuo currency is weak. But also, we shall not forget that we just have no experience any more with a situaiton like this! I eman, even the unemployment rate for example is not above Eurpean average here, but because there was basically no unemployment here before for such a long time, it is hard to handle. Also, these numebnrs are not good because other countries are worse, but it is abeginning of getting better and that is what we have to work for.
As I said over on IWR, although presumably the various negotiating teams were aware of this, Lee Buchheit must be saying “SHUT UP!”.
It may be that I have the wrong figure, but it looks like UK Net debt is 60% vs. Iceland’s 39%:
http://www.statistics.gov.uk/cci/nugget.asp?id=206