Iceland’s balance of payments improved substantially in December, following the finalization of composition agreements between the government and the estates of the failed banks in the winding-up proceedings, according to a report from the Central Bank of Iceland. This substantially affected Iceland’s investment position.
The estates of the failed banks were placed in winding-up proceedings in the fall of 2008. In December last year, binding composition agreements were reached with the estates’ creditors. Cash will be paid to creditors, as well as debt and equity securities.
The agreement entails that ISK 1,904 billion (USD 14.61 billion, EUR 13.43 billion) goes to the banks’ creditors, while debts to the creditors amounting to ISK 7,134 billion (USD 54.73 billion, EUR 50.32 billion) are written off. Only a portion of the payments was carried out during the fourth quarter of 2015. The remainder will be paid later in the form of cash, bonds or shares.
Foreign assets totaled ISK 4,785 billion at the end of December, but foreign liabilities stood at ISK 5,101 billion. The net position is, thus, negative by ISK 316 billion (USD 2.43 billion, EUR 2.23 billion), or 14.4 percent of the GDP. Net liabilities decreased between quarters by ISK 7,196 billion (USD 55.21 billion, EUR50.76 billion) or by 328.6 percent of the GDP.
Thus, Iceland’s net liabilities at the end of September 2015 were ISK 7,512 billion, or 343 percent of the GDP; net liabilities the end of 2005 were 86.2 percent of the GDP and at the end of 1995, they were 50.4 percent of the country’s GDP, according to RÚV.
You can view the Central Bank’s report here.
