Government at a Glance 2025: Iceland
Table of contents
Trust in public institutions, levels of shared prosperity and satisfaction with public services are important yardsticks of the quality of public governance. They reflect both the outcomes of government actions to support the public and people’s perceptions of government competence in policy design and delivery, as well as their expectations of the behaviour of public institutions and their representatives.
In Iceland, 36% of people had high or moderately high trust in the national government, slightly below the OECD average of 39% in 2023. Moreover, a majority (66%) were satisfied with the administrative services they used, the same as the OECD average.
Education and training opportunities help younger people benefit from economic growth and empower them to participate fully in society. In 2023, 6.7% of youth in Iceland were not in employment, education, or training (NEET), below the OECD average of 12.6%. The percentage of NEET in Iceland has decreased since 2012, when it was 8.1%.
Good governance is instrumental for enhancing individuals’ sense of dignity in their interaction with governments, restoring individual and collective sense of security in the face of rapid societal and economic changes, and improving the efficiency and effectiveness of government to boost productivity. Central to this effort is the strategic use of digital technologies to increase transparency, responsiveness, and data-driven decision-making. Equally important are the modernisation of procurement systems, the upgrading of budgeting frameworks, and the reform of regulatory structures - all of which are essential for navigating the complex challenges ahead.
Governments today must navigate a fast-changing digital landscape and growing public expectations of seamless services. The Digital Government Index (DGI) benchmarks digital government policies along six dimensions: digital by design, data-driven public sector, government as a platform, open by default, user-driven, and proactiveness, with scores ranging from 0 (the lowest) to 1 (the highest) for each dimension. The total DGI score is the average score of all dimensions.
Iceland scored slightly above the OECD average on the Digital Government Index in 2022 with 0.64 compared to the OECD average of 0.61. Iceland’s strongest dimension was “Proactiveness”.
Translating green objectives into concrete obligations, such as predefined targets, helps governments in implementing, monitoring, reporting, and evaluating environmental policy objectives. Iceland incorporates environmental objectives in its procurement-specific policy documents and sets quantitative targets for green public procurement to operationalise these objectives and track progress in green public procurement. In comparison, 24 OECD countries out of 35 (69%) with available data define quantitative targets, while 11 (31%) do not.
Spending reviews, through systematic analyses of existing expenditure, help governments managing their overall level of expenditure, identifying savings or reallocation measures to fund new priorities, and improving effectiveness within programmes and policies. Iceland conducts annual spending reviews. Across 35 OECD countries, 20 (57%) conduct annual spending reviews, while 9 (26%) do them periodically, 5 (14%) have piloted such reviews, and 1 (3%) is considering them.
Regulatory impact assessments (RIAs) are used to assess the potential impact of new regulations, both positive and negative. They provide decision makers with crucial information on whether and how to regulate to achieve public policy goals. The OECD Indicators of Regulatory Policy and Governance (iREG) measure the quality of RIA systems for primary laws in OECD countries across 4 dimensions: oversight and quality control, transparency, systematic adoption, and methodology. In the 2024 survey, Iceland scored 1.8 on the index (on a 0-4 scale), below the OECD average of 2.3. Iceland’s strongest dimension was ‘Systematic Adoption’, where it scored 0.7 out of 1.
Government levers for policy development and implementation are increasingly constrained by limited fiscal space. Therefore, it is essential to ensure that resources are managed and allocated both effectively and efficiently. This includes equipping public institutions with the necessary skills and competences to deliver to citizens according to their needs and expectations.
The fiscal balance is the difference between a government’s revenues and its expenditures in a year. It indicates whether public accounts are in surplus or deficit. In 2024, Iceland had a fiscal deficit of 3.5% of GDP, compared to 2.3% in 2023, indicating a widening of the deficit. This compares to the OECD average fiscal deficit of 4.6% of GDP in 2023. In 2019, before the onset of the global pandemic, Iceland had a fiscal deficit of 1.6%.
The level of public provision of goods and services varies significantly between countries depending on policy choices, priorities and traditions. The general government expenditures capture the totality of financial commitments across all levels of government. These expenditures not only indicate current policy priorities and the structure of service provision, but also provide a basis for assessing the effectiveness and sustainability of public action.
In 2023, Iceland had expenditure levels of 45.3% of GDP, above the OECD average of 42.6% the same year. Compared with 2019 (43.6%), a pre-pandemic year, general government expenditure in Iceland increased by 1.7 percentage points. The latest data show that Iceland’s general government expenditure increased in 2024 (46.3% of GDP) compared to the previous year.
Government at a Glance presents the most up-to-date internationally comparable data on how public administrations function and perform in OECD countries, accession countries, and other major economies. Country factsheets highlight key indicators against the OECD average. Data included in the factsheets are derived from the new Government at a Glance data portal, which allows for a more user-friendly and interactive way of comparing countries with each other and the OECD average. The factsheets do not provide a comprehensive picture of public governance performance, but rather a snapshot of key indicators in the three sections of the publication: a) Trust, prosperity and satisfaction with public services; b) Achieving results with good governance practices, and; c) what resources public institutions use and how they are managed.
Data on public finance and economics are derived from the System of National Accounts (SNA) and were extracted on 8 May 2025.
The data on indicators of age profile in the central administration workforce-based on the OECD Survey on the composition of the workforce in central/federal governments-were validated and finalised on 30 November 2024.
OECD average refers to the unweighted average with the exception of public finance indicators.
For more information see https://www.oecd.org/en/publications/government-at-a-glance-2025_0efd0bcd-en.html.
This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Member countries of the OECD.
This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
The full book is available in English: OECD (2025), Government at a Glance 2025, OECD Publishing, Paris, https://doi.org/10.1787/0efd0bcd-en
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