The 2006 budget is expected to leave an ISK 14 billion surplus. Finance Minister Árni M. Mathiesen said that the budget displays the “incredibly strong position of the Icelandic treasury”. According to the 2006 budget, the government’s income increases by ISK 21 billion while expenses increase by ISK 17 billion. Income is expected to be ISK 327 billion, expenses ISK 313 billion. Income from income tax is expected to increase by 9%, ISK 6.5 billion more than this year. Value added tax is expected to be ISK 114.5 billion next year, ISK 13 billion more than this year.
The Ministry of Finance also introduced an economic forecast for 2005-2010. The economic conditions of the forecast include 4.6% economic growth, 3.8% inflation, and 12.2% trade deficit. The currency index for the year is expected to 114 points. The Icelandic National Broadcasting Service points out that there is quite a difference between the forecast from the Finance Ministry and the forecast that the Central Bank published last Thursday. The Central Bank predicts higher economic growth next year, but a lower trade deficit. Both forecast similar inflation figures.