Overview: The Faroese, who have long enjoyed the affluent living standards of the Danes and other Scandinavians, now must cope with the decline of the all-important fishing industry and one of the world's heaviest per capita external debts of nearly $30,000. When the nations of the world extended their fishing zones to 200 nautical miles in the early 1970s, the Faroese no longer could continue their traditional long-distance fishing and subsequently depleted their own nearby fishing areas. The government's tight controls on fish stocks and its austerity measures have caused a recession, and subsidy cuts will force nationalization in the fishing industry, which has already been plagued with bankruptcies. Copenhagen has threatened to withhold its annual subsidy of $130 million - roughly one-third of the islands' budget revenues - unless the Faroese make significant efforts to balance their budget. To this extent the Faroe government is expected to continue its tough policies, including introducing a 20% value-added tax (VAT) in 1993, and has agreed to an IMF economic-political stabilization plan. In addition to its annual subsidy, the Danish government has bailed out the second largest Faroe bank to the tune of $140 million since October 1992.

National product: GDP - purchasing power equivalent - $662 million (1989 est.)

National product real growth rate: 3% (1989 est.)

National product per capita: $14,000 (1989 est.)

Inflation rate (consumer prices): 2% (1988)

Unemployment rate: 2.5% (1993 est)

Budget:
revenues: $425 million
expenditures: $480 million, including capital expenditures of $NA (1991 est.)

Exports: $386 million (f.o.b., 1990 est.)
commodities: fish and fish products 88%, animal feedstuffs, transport equipment (ships) (1989)
partners: Denmark 20%, Germany 18.3%, UK 14.2%, France 11.2%, Spain 7.9%, US 4.5%

Imports: $322 million (c.i.f., 1990 est.)
commodities: machinery and transport equipment 24.4%, manufactures 24%, food and livestock 19%, fuels 12%, chemicals 6.5%
partners: Denmark 43.8%, Norway 19.8%, Sweden 4.9%, Germany 4.2%, US 1.3%

External debt: $1.3 billion (1991)

Industrial production: growth rate NA%

Electricity:
capacity: 80,000 kW
production: 280 million kWh
consumption per capita: 5,760 kWh (1992)

Industries: fishing, shipbuilding, handicrafts

Agriculture: accounts for 27% of GDP and employs 27% of labor force; principal crops - potatoes and vegetables; livestock - sheep; annual fish catch about 360,000 metric tons

Economic aid:
recipient: receives an annual subsidy from Denmark of about $130 million

Currency: 1 Danish krone (DKr) = 100 oere
Exchange rates: Danish kroner (DKr) per US$1 - 6.771 (January 1994), 6.484 (1993), 6.036 (1992), 6.396 (1991), 6.189 (1990), 7.310 (1989)

Fiscal year: 1 April - 31 March

NOTE: The information regarding Faroe Islands on this page is re-published from the 1995 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of Faroe Islands Economy 1995 information contained here. All suggestions for corrections of any errors about Faroe Islands Economy 1995 should be addressed to the CIA.