Iceland: Selected Issues

IMF Staff Country Reports, December 19, 2019

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Iceland: Selected Issues

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Bibliographic details

• Published: December 19, 2019
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781513523682.002

Overview and purpose

• Publication date: December 19, 2019
• This Selected Issues paper examines scope for improving Iceland’s fiscal framework.
• Focus areas: Fiscal policy, Fiscal rules, Fiscal stance, Output gap, Production, Public debt.

Key findings

• Iceland’s fiscal framework provides for a forward-looking exercise in consolidated fiscal planning.
• The Icelandic fiscal framework shares most elements of successful fiscal frameworks but would benefit from more structured guidance in dealing with cyclical fluctuations.
• The framework is backed by a firm legal basis that reflects political support for the fiscal policy objectives, covers the consolidated general government, and is based on sound accounting practices and budget management arrangements.
• The current parameters of the policy rules have a bias to reduce net public debt and gradually build fiscal space to deal with adverse shocks to economic activity.

Policy proposals and implications

• Adding a primary structural balance rule to the framework would ensure a countercyclical fiscal policy but would add significant complexity.
• Once the net public debt reaches a socially desirable level, the fiscal rule parameters may be modified to keep net public debt fluctuating around that level.

Keywords and thematic tags

• countercyclical fiscal policy
• CR
• disp-formula id
• fiscal policy statement
• Fiscal rules
• Fiscal stance
• Global
• interest rate
• ISCR
• Output gap
• primary spending
• spending ratio

Publication metadata and identifiers

• Pages: 24
• Volume: 2019
• Issue: 376
• Series: Country Report No. 2019/376
• DOI: https://doi.org/10.5089/9781513523682.002
• Stock No: 1ISLEA2019002
• ISBN: 9781513523682
• ISSN: 1934-7685

Source: Iceland: Selected Issues (IMF Staff Country Reports 2019, 376), December 19, 2019.

Content in this bundle

• Iceland: Selected Issues; IMF Country Report No. 19/376; December 4, 2019
  • Iceland: Selected Issues; IMF Country Report No. 19/376; December 4, 2019 (Markdown version)
  • Iceland: Selected Issues; IMF Country Report No. 19/376; December 4, 2019 (PDF)