The Central Bank of Iceland will today publish on its website preliminary
statistics for the balance of payments in the first quarter of 2007, and for
the external position at the end of March.
The deficit on the current account was 28 b.kr. in Q1/2007, which is only half
that in the corresponding quarter a year before (57.3 b.kr.). A deficit was
shown on all current accounts: goods, services, income and current transfer.
The deficit on the goods account was 8.1 b.kr., compared with 31.9 b.kr. in
Q1/2006. Specific factors explain part of the narrowing of the current account
deficit in Q1/2007, such as aircraft sales and profits on foreign investment.
The turnaround in the balance on income reflects residents' shares in profits
on direct foreign investment abroad, which are measured as income and are
reinvested at the same time in the companies. A slight increase was shown on
the expenditure side of the income account, which is likewise explained by
reinvested profit on direct foreign investment in Iceland. However, little new
inward investment was made in Iceland during the quarter.
Net financial outflow measured 88.3 b.kr. over Q1/2007. Foreign direct and bond
portfolio investment by residents grew considerably from Q4/2006. On the other
hand, foreign direct investment in Iceland by non-residents contracted, as did
their portfolio investment in marketable securities.
Balance of payments in b.kr.
January March
2006 2007
Current Account -57.3 -28.1
Exports of goods and services 77.2 108.5
Imports of goods and services -122.8 -128.1
Income and current transfer, net -11.7 -8.5
Capital and Financial Account 216.6 -88.3
Financial account excl. reserves 219.8 -87.3
External assets, net -357.8 -585.2
External debt, net 577.6 497.9
Reserve assets (- increase) -3.7 0.1
Net errors and omissions -158.2 116.3
The large errors and omissions item in the balance of payments in Q1/2007 is
expected to decrease as more complete data become available. One explanation is
known to be that accrued interest is included in the balance on income but no
adjustment is made for the difference between accrued and paid interest in the
financial account. However, the main explanation is that data on the timing of
underlying payment flows for merchandise trade and capital movements are as yet
incomplete.
Iceland's international investment position was negative by 1,283 b.kr. at the
end of Q1/2007, having improved by 114 b.kr. over the quarter. This improvement
was largely driven by an appreciation of the króna, which measured 7.8% on the
exchange rate index. Foreign assets amounted to 4,787 b.kr. and foreign
liabilities to 6,069 b.kr. at the end of Q1/2007.
For further information contact Kristíana Baldursdóttir at the Statistics and
IT Department of the Central Bank of Iceland, tel. (+354) 569-9600.
- Balance of payments in the first quarter of 2007 and the external position
| Source: Seðlabanki Íslands