The Minister of Finance, Bjarni Benediktsson, told reporters yesterday that he expects the Icelandic National Debt to drop below 20% of GDP in the next few years. The debt level now stands at 24.1% of GDP, compared to nearly 100% of GDP following the 2008 banking crash.
Read more: Icelandic national debt now only 24.1% of GDP as government continues to pay off debts
The dropping debt level means a shrinking portion of the government budget goes to servicing the national debt and meeting interest payments. The cost of the debt will be 13% lower in 2019 than this year, and 40% lower than in 2016. The savings in annual debt service is significantly more than the state spends investing in roads.
Bjarni told the local newspaper Morgunblaðið that interest on government debt will be 1.4% of GDP in 2019, and are scheduled to drop to below 1% of GDP within the next few years, leaving more to spend on infrastructure investment or other programs or to lower taxes. Lower government debt also provides the state with an important cushion to respond to unexpected shocks or crises, Bjarni stresses.
According to the law on public finances the combined debt of the state and municipal governments cannot exceed 30% of GDP. It will have dropped to 30.5% by the end of the year, and go below 30% by the end of 2019.
The Minister of Finance, Bjarni Benediktsson, told reporters yesterday that he expects the Icelandic National Debt to drop below 20% of GDP in the next few years. The debt level now stands at 24.1% of GDP, compared to nearly 100% of GDP following the 2008 banking crash.
Read more: Icelandic national debt now only 24.1% of GDP as government continues to pay off debts
The dropping debt level means a shrinking portion of the government budget goes to servicing the national debt and meeting interest payments. The cost of the debt will be 13% lower in 2019 than this year, and 40% lower than in 2016. The savings in annual debt service is significantly more than the state spends investing in roads.
Bjarni told the local newspaper Morgunblaðið that interest on government debt will be 1.4% of GDP in 2019, and are scheduled to drop to below 1% of GDP within the next few years, leaving more to spend on infrastructure investment or other programs or to lower taxes. Lower government debt also provides the state with an important cushion to respond to unexpected shocks or crises, Bjarni stresses.
According to the law on public finances the combined debt of the state and municipal governments cannot exceed 30% of GDP. It will have dropped to 30.5% by the end of the year, and go below 30% by the end of 2019.
