Treasury debt has fallen by over ISK 88 billion ($809m/€710m) over the past 12 months, Morgunblaðiðreports. In April 2018, Iceland’s treasury debt amounted to ISK 866 billion ($8b/€7b), or around 32% of GDP.
“This is largely explained by the sale of the state’s share in Arionbanki bank and the payment of government bonds due to Arionbanki,” stated Minister of Finance Bjarni Benediktsson. “We have used these funds to settle debts, in addition to lowering the government’s credit balance at the Central Bank of Iceland.”
Over the past 12 months, the Central Bank of Iceland has bought back bonds issued in 2008 to refinance banks after the banking collapse.
Moddy’s Investor’s Service changed the Government of Iceland’s sovereign rating outlook to positive from stable last month, citing the lowering of government debt and the country’s improving economic resilience as the reasons behind the change.