Icelandic National Broadcasting Service, RÚV, reports that foreign debt has risen by 40% this year and 98% since the year 2003.
According to KB Bank this development is mostly due to the increase of foreign loans of Icelandic banks; they have increased by 50% this year and increased by 157% since 2003.
At the end of September, the foreign debt of Iceland amounted to ISK 2.334 billion, a 4% increase from month to month according figures recently released by the Icelandic Central Bank.
The bulk of the increase is attributed to bonds issued by Icelandic banks in international markets. The amount outstanding has doubled since the beginning of this year and now clocks in at ISK 1.500 billion. Public debt has, however, decreased by 16% over the same period.
The gross foreign debt of Iceland, public and private, now amounts to 235% of GDP compared to 200% at the end of last year. According to RÚV, it is primarily driven by inflow of international funds into the Icelandic economy which has propped up the Icelandic króna and financed a record trade deficit.
The net foreign debt of Iceland, ie, foreign debt less foreign assets, amounts to ISK 858 billion. This deficit has increased by 25% since last year and now represents 89% of GDP or approximately ISK 2.9 million per citizen.