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According to, although the price of oil has been dropping in recent weeks, the Central Bank forecasts that the price will increase more than had been projected in the February edition of Monetary Affairs.

This came out last week at a press conference, where the bank’s Chief Economist Thorarinn G. Petursson spoke. He said that the result would be that Iceland’s terms of trade would weaken by 2% instead of strengthening by 0.5%.

Citing payment card turnover, he further said that vigourous growth in private consumption in the second quarter had come as a surprise. Private consumption this year is now projected at 6.8% in the fourth quarter, and the growth in private consumption this year will therefore be 3.8% instead of 2.7% as previously projected.

The bank’s survey of 114 companies indicates that industrial investment, excluding energy-intensive industry and investments in ships and aeroplanes, will be 6% this year, while the bank’s economic forecast in April provided for a contraction of 3%. Nevertheless, total investment will be weaker than forecast last April, mainly because of weaker investment in energy-intensive industry. All in all, the bank projects economic growth of 2.8% this year instead of 2.3% as forecast last April.  

Four ministries examining meat tariffs
According to, a workgroup from four ministries will respond to the ruling of Alþingi’s Ombudsman that the Tariff Act has flaws contravening the Constitution of the Republic.

The matter has lain with the Ministry of Fisheries and Agriculture since 21 July when the ruling was made, but it was also sent to Alþingi and the Ministry of Finance, which supervises tariff matters. In addition, the workgroup will include representatives from the Ministry of Foreign Affairs and the Office of the Prime Minister.

Minister of Fisheries and Agriculture Jon Bjarnason (LGP) said it would be a “major matter” if Alþingi enacted an unconstitutional law in 2005, but the possibility would be examined. Store owners have complained of meat shortages, but Bjarnason said that there has been no concrete confirmation of such. Frettablaðið recently reported that the Federation of Trade and Services filed a complaint with Alþingi’s Ombudsman regarding no import quota having been issued for lamb meat.

Big increase in the catch fees
According to Morgunblaðið, it seems likely that the catch fee will be increased substantially, considerably more than the Parliament resolved last spring. During the current fishery period the fee was ISK 6.44 per kilogram but there is talk of an increase of ISK 13 per kilogram. Last spring the Parliament resolved is increase the fee from 9.5% to 13.3% of the calculated contribution margin and subsequently the Minister of Fisheries passed a regulation to the effect that the catch fee would be ISK 9.46 of each landed cod equivalent.

It was estimated that this increase would give ISK 4.5 milliards (US$ 39M) and the planned increase would give ISK 2.5 – 3 milliards additionally. All things being equal the budget deficit is estimated to amount to ISK 45 milliards (US$ 391M) next year and the government’s MPs are trying to reduce it to some ISK 17 milliards (US$ 147m) There have been many changes made to the tax system under the current government, many taxes have been increased and thirteen new ones introduced. 

Whaling a sentimental issue 
According to, Jon Bjarnason, the Minister of Fisheries and Agriculture, (Left Green Party), was severely criticized by the government’s MPs at a mutual meeting of the Parliamentary Committees of Foreign Affairs, Fisheries and Agriculture and the Environment for the conduct of the Icelandic Delegation at the meeting of the International Whaling Commission in July last.

The Icelandic Delegation left the meeting to prevent that the meeting would resolve and vote on a hotly disputed proposal of South American states on the establishment of a sanctuary in the South-Atlantic. According to Bjarnason whaling is a sentimental issue and sentiments can overwhelm people.
All stories reprinted with permission from INB published KOM PR


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