WORLD TRADE  
ORGANIZATION  G/SCM/N/123/ISL 
16 November 2005 
 
 (05-5338) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full and Updating Notifications Pursuant to Article XVI:1 of the  
GATT 1994 and Article 25 of the SCM Agreement  
 
ICELAND 
 
  The following communication, dated 11 November 2005, is being circulated at the request of 
the Delegation of Iceland. 
 
_______________ 
 
 
1. The Agricultural Sector 
A. N
AME OF PROGRAMME  
1.1.  Agricultural Agreements; Payments to dairy farms, sheep farm s and horticulture farms 
 (Budget items No: 04-801, 04-805 & 04-807). 
 B. R
ESPONSIBLE AUTHORITY  
 Ministry of Agriculture. 
 C. P
OLICY OBJECTIVE  
 Agricultural policy is implemented in Iceland in pursuit of objectives which include 
increasing efficiency in the agro-food sector, en suring self-sufficiency for the country’s major 
agricultural production;  seeking to utilize domestic inputs to the extent possible; increasing overall 
efficiency in the agricultural food sector; utilizing export opportunities to the extent feasible; securing 
an equitable income for farmers; and integra ting environmental issues in agricultural policy. 
 D. F
ORMS OF SUBSIDY  
 As a part of the move toward a more transparent and efficient system of transfers, direct 
payments based on support targets were introduced  for registered farms producing sheepmeat and 
milk in 1992 and 1993, respectively.  However, as of the 1996 Agricultural Agreement, production of 
sheepmeat was no longer a prerequisite;  farmer s need only to own 60%  live sheep for their 
sheepmeat entitlements (i.e. formerly support target s).  Allocations of funds for the Agricultural 
Agreements in the year 2004 are made under item 04-801 and item 04-805 of the State budget 
(Ministry of Agriculture).  As of year 2002, direct payments were introduced to farmers in 
horticulture, producing cucumbers, peppers and tomato es.  Allocation for these payments in the year 
2004 is made under item 04-807 of the St ate budget (Ministry of Agriculture). G/SCM/N/123/ISL 
Page 2  
 
  
E. A
MOUNT OF SUBSIDY  
 Items making up the amount of support as measured by total costs budgeted for the year 2004 
are listed in tables 1 and 2:  Table 1  Amount of support as measured by total costs budgeted for 2004; million ISK  
 
 2004  
Agricultural Productivity Fund 185.0 
Market Regulation (sheepmeat stockholding costs and withdrawal of sheepmeat 
entitlements)  802.6 
Price Support (total direct payments for milk , sheepmeat and horticulture production) 5.905.
2 
 
Table 2  Price support for 2004;  million ISK 
 
 2004  
Subsidies; wool 273.4 
 
F. RULES AND CONDITIONS  
 Implementation of the agricultural polic y revolves around Agricultural Agreements 
negotiated between the Government and the Farm er’s Association.  Under Act No. 99/1993 on 
Production, Pricing and Sales of Agricultural Produc ts, the Minister of Agriculture is given the 
authority to negotiate with the Farmer’s Associa tion on behalf of the Government on the total support 
target for milk and total support target for sheepmeat entitlements and direct payments for 
horticulture.  Administered prices are infused for milk, but as of September 1, 1998 administered prices were abolished for sheepmeat.   Support is provided for dairy farms, sheep farms and horticulture farms. 
 
1.  Dairy farmers
 
  Milk producers receive direct payments from th e Government on milk delivered to dairies.  
The annual quantity must be within the allocated supported targets.  The amount of monetary support 
is the same for all producers in Iceland. 
 
2.  Sheep farmers
 
  Sheep farmers receive direct payments fro m the Government which are based on support 
targets for sheepmeat entitlements, for which they must own 60% live sheep. 
 
3.  Sheep farmers; wool
 
  Wool scouring plants receive support from the Government and a regulated producer price for 
wool is maintained above the world market price level.  The price of wool is thus administered at both 
the producer and the wholesale level.  G/SCM/N/123/ISL 
 Page 3 
 
 
  
4.  Horticulture farmers  
  Horticulture farmers producing cucumbers, peppers and tomatoes in greenhouses, mainly 
under artificial lighting, receive direct payments from the government. 
 
5.  Market regulation
 
  Market regulation funds are used to pay for stockholding costs, marketing efforts and withdrawal of sheepmeat entitlements.  Due to the relatively short slaughter season (on average about 
six weeks in the months of September and Octobe r) accumulation and holding of stocks of sheepmeat 
between slaughter seasons is necessary as a safety me asure to ensure supply.  Specific marketing 
efforts geared towards promotion of sheepmeat are included under this heading along with costs 
associated with withdrawal of sheepmeat entitlements.  
 With reference to the above mentioned program mes, direct payments to dairy producers, 
sheepmeat entitlements holders and horticulture producer s are granted directly to the farmers.  The 
other two programmes are to be considered as market regulation schemes.  G. D
URATION  
 Current Agricultural Agreements will term inate [or have terminated] on 31 August 2005 
(dairy farmers), on 31 December 2007 (sheep  farmers) and (horticulture farmers) on 
31 December 2011.  H. L
EGAL BASIS  
 Act No. 99/1993 on Production, Pricing and Sa les of Agricultural Products.  The State 
Budget. 
 I. T
RADE EFFECTS  
 An assessment of the trade effects of the subsid ies is not available.  Below, in tables 3 and 4 
there are, however, presented statistics on producti on, consumption and exports of the relevant 
agricultural commodities. 
 
Table 3 - Quantity of milk received by dairies and calculated consumption by fat-content of 
milk derived products 2004 (1000  litres)   
Year  Milk, received 
by dairies Cream  Yoghurt  
products, etc. Butter  Cheeses  Skimmed  
Milk-powder, etc. 
2004 112.030 16.862 2.657 24.971 25.578 2.036 
 
Table 4 - Sheepmeat production and allocation 2004 (1000 kg’s) 
 
Year  Production  Export  Consumption  
2004 8.644 1.431 7.213 
 
 G/SCM/N/123/ISL 
Page 4  
 
 2. Support for R&D and Technological Innovation 
2.1  Technology fund 
 
A. R
ESPONSIBLE AUTHORITY  
 Icelandic Research Council which is under th e supervision of the Ministry of Culture and 
Education. 
 B. P
OLICY OBJECTIVES  
 The objective of the Technology  Fund is to facilitate innovation through supporting research 
and technological development. 
 
C. AMOUNT AND FORM OF STATE AID  
 The amount of State aid and number of projects in 2004:  ISK 81,65 million. 
  D. R
ULES AND CONDITIONS  
 Subsidies are granted only on the basis of project  applications and all projects are cofinanced.  
The average support granted is around 30 per cent of total project expenses.  There are only matching grants and applicants finance the re maining costs by own funding.  Su pport is granted to universities, 
public research institutes business enterprises and indivi dual scholars.  All categories of applicants 
regardless of the branch of industry are eligible.  
E. L
EGAL BASIS  
 Act no. 61/1994 on the Icelandic Research  Council, as amended by Act No. 44/1995. 
 F. T
RADE EFFECTS  
 The support is granted to a variety of small projects and sectors, therefore it is difficult to 
present statistical data permitting an assessment of trade effects.  
 G. D
URATION  
 The Technology Fund expired in 2004 and h as been replaced by the Technical Development 
Fund (see notification at the end of this report).  2.2  Science Fund 
 
A. R
ESPONSIBLE AUTHORITY  
 Icelandic Research Council which is under th e supervision of the Ministry of Culture and 
Education. 
 
B. POLICY OBJECTIVES  
 The objective of the Science Fund is to facilitate fundamental research at University institutes 
or other Governmental R&D institutes.   G/SCM/N/123/ISL 
 Page 5 
 
 
 C. AMOUNT AND FORM OF STATE AID  
 The amount of State aid and number of projects in 2004: ISK 75,3 million. 
 D. R
ULES AND CONDITIONS  
 Subsidies are granted only on the basis of project applications.  The Funds grants are for 
fundamental research at Universities and the involvem ent of private companies is very limited or non-
existent.  E. L
EGAL BASIS  
 Act no. 61/1994 on the Icelandic Research  Council, as amended by Act No. 44/1995. 
 
F. TRADE EFFECTS  
 The support is granted to a variety of small projects and sectors, therefore it is difficult to 
present statistical data permitting an assessment of trade effects.   
G. D
URATION  
 The Science Fund expired in 2004 and the Rese arch Fund took over (see notification at the 
end of this report).  
2.3 Support for R&D in marine aquaculture 
 A. R
ESPONSIBLE AUTHORITY  
 Ministry of Fisheries. 
 B. P
OLICY OBJECTIVE  
 To enhance scientific knowledge in marine aquaculture. 
 
C. FORM OF SUPPORT  
 Grants. 
 D. A
MOUNT OF SUPPORT  
 2004:  19,1 million ISK 
 
E. RULES AND CONDITIONS  
 Grants are awarded on the basis of appli cations evaluated by a special committee. 
 F. D
URATION  
 There is no time limit, but each programme is decided on for a year at a time.   
 G. L
EGAL BASIS  
 The Budget  item 05-190.1.20. G/SCM/N/123/ISL 
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H. T
RADE EFFECTS  
 There is no trade effect due to limited support. 
  3. Support to Small and Medium-Sized Companies 
3.1 Job Creation Initiative (prior to 1996 kno wn as Firm specific subsidies and export 
promotion (Case 93-221)). 
 (Budget item 11-299-1.48). 
 
A. R
ESPONSIBLE AUTHORITY  
 IceTec, under the auspices of the Ministry of Industry and Commerce. 
 B. P
OLICY OBJECTIVE  
 The objective is, to increase the knowledge a nd competence of entrepreneurs and small and 
medium-sized enterprises such as in managing, financing, product development, marketing and 
innovation.  C. F
ORM OF SUPPORT  
 Cost items incurred for consultants, produc t development, marketing and innovation are 
eligible for grants.  Support shall in general not cover more than 30% of eligible expenses and must 
not exceed 50%.  
 D. A
MOUNT OF SUPPORT  
 2004:  53,4 million ISK. 
 
E. RULES AND CONDITIONS  
 Firms and individuals having a registered domic ile in Iceland can apply for a grant.  In 
accordance with the de minimis  rule, individuals who apply for gr ants according to these rules must 
declare that they have not received a grant from the Government amounting to more than 
ISK 8.4 million (100,000 EURO) last 3 years, the grant applied for included.  In this context, special 
grants for investment are not included.  Some IS K 33 Million of the amount is allocated to firms and 
individuals located in rural areas not enjoying the ongoing development of hydropower and related 
industrial development.  F. D
URATION  
 There is no time limit, but each programme is decided on for a year at a time.   
 
G. LEGAL BASIS  
 The Budget. 
  G/SCM/N/123/ISL 
 Page 7 
 
 
 H. TRADE EFFECTS  
 There are no trade effects of the support due to the general framework of the scheme and 
limited support.   3.2 New Business Venture Fund 
 
A. R
ESPONSIBLE AUTHORITY  
 The New Business Venture Fund, under the auspices of the Ministry of Industry and 
Commerce. 
 
B. POLICY OBJECTIVE  
 To assist micro, small and medium-sized companies in product development and marketing 
projects and promote enhanced competitiveness among companies which qualify for its grant.  Special focus on entrepreneurs, micro and small companies.  
 
C. F
ORM OF SUPPORT  
 Cost items incurred for consultants, produc t development, marketing and innovation are 
eligible for grants.  D. A
MOUNT OF SUPPORT  
 2004:  ISK 17,85 million 
 Number of recipients:  36.  E. R
ULES AND CONDITIONS  
 Firms and individuals having a registered domic ile in Iceland can apply for a grant.  In 
accordance with the de minimis  rule, individuals who apply for gr ants according to these rules must 
declare that they have not received a grant from the Government amounting to more than 
ISK 8.4 million (100,000 EURO) last 3 years, the grant applied for included.   F. D
URATION  
 There is no time limit.   
 
G. LEGAL BASIS  
 Act No 61/1997 on the New Business Ve nture Fund, with later amendments. 
 H. T
RADE EFFECTS  
 There are no trade effects of the support due to the general framework of the scheme and 
limited support.   G/SCM/N/123/ISL 
Page 8  
 
 4. Support for Employment and Training 
4.1  Vocational Training Fund.  Support for Vocational Training 
 
A. R
ESPONSIBLE AUTHORITY  
 Ministry of Social Affairs, Directorate of Labour. 
 
B. POLICY OBJECTIVE  
 The main purpose of this programme is to ma intain and develop voca tional skills, in most 
cases for people already employed.   
C. F
ORM OF STATE AID  
 Grants. 
 D. A
MOUNT OF STATE AID  
 Actual total expenditure in 2004:  ISK 58,1 million. 
 Through the programme around 30 to 40 recipien ts have received different vocational training 
courses.  Most of these recipients are non-profit or public organizations.  E. R
ULES AND CONDITIONS  
 Grants to organizations on application to  the Vocational Training Fund mainly to make 
curriculum or other teaching materials for the vocational training courses. 
 
 On 27 June 2001 the EFTA Surveillance Aut hority decided to close a case concerning the 
Vocational Training Fund (Dec. No. 221/01/COL).  F. D
URATION  
 The programme started in 1992.  Duration has not been specified. 
 G. L
EGAL BASIS  
 Act No.19/1992 on Vocational Training, the Budget, item No.07-984. 
  4.2 Employment Opportunities for Women in Rural Areas 
 
A. R
ESPONSIBLE AUTHORITY  
 Ministry of Social Affairs, Directorate of Labour. 
 
B. POLICY OBJECTIVE  
 The main purpose of this programme is to create new jobs among women.  Areas where high 
unemployment is among women will es pecially be considered.   
   G/SCM/N/123/ISL 
 Page 9 
 
 
 C. FORM OF STATE AID  
 Grants, up to 50% of primary R&D costs, i nnovation costs and cost of new products, process 
and systems for industrial production.  Directorate of Labour pays the grants and controls their 
disposition.  
D. A
MOUNT OF STATE AID  
 Actual total expenditure in 2004: ISK 23,3 million. 
  It is difficult to give exact information on how many jobs have been created or maintained, as 
many of these new jobs are just part time jobs. 
 
E. R
ULES AND CONDITIONS  
 Grants to women on application to the Directorate of Labour mainly to new product 
developing and marketing.  The grant can also be gi ven to companies, which have been established by 
women. 
 
 On 27 June 2001 the EFTA Surveillance Aut hority decided to close a case concerning the 
Employment Opportunities for Women in Rural Areas (Dec. No. 221/01/COL).  F. D
URATION  
 The programme started in 1990.  Duration has not been specified. 
 
G. LEGAL BASIS  
 Governmental decision from 1990, the Budget item no.07-984. 
  4.3 Vocational Rehabilitation and Employment of Handicapped Persons 
 
A. R
ESPONSIBLE AUTHORITY  
 Ministry of Social Affairs. 
 B. P
OLICY OBJECTIVE  
 The main purpose of this programme is to rehabilitate disabled persons. 
 C. F
ORM OF STATE AID  
 Gross wage State aid to rehabilitation centres. 
 
D. AMOUNT OF STATE AID  
 Actual total expenditure in 2004:  ISK 227,3 million. 
 G/SCM/N/123/ISL 
Page 10  
 
 E. R
ULES AND CONDITIONS  
 The rehabilitation centres must have operating license from the Ministry of Social Affairs to 
apply to the Ministry for subsidies.  On 27 J une 2001 the EFTA Surveillance Authority decided to 
close a case concerning the Vocational Reha bilitation Centres (Dec. No. 221/01/COL). 
 
F. DURATION  
 The new programme started in 1992.  Duration has not been specified.   
 G. L
EGAL BASIS  
 Act No.59/1992, Affairs of the Handicap Act and financed by the Budget item nos.  07.701, 
07.702, 07.703, 07.706, 07.707, 07.708 and 07.711. 
    
4.4 Vocation Training in the Fishing Industry  
 A. R
ESPONSIBLE AUTHORITY  
 Ministry of Fisheries. 
 B. P
OLICY OBJECTIVE  
 The aim of the programme is to promote th e quality awareness and the quality of the working 
life within the industry with the aim to create be tter products and make the workers more pleased.  
 
C. FORM OF STATE AID  
 State aid is in the form of grants, based on administration costs of seminars and training 
programmes concerning training, quality, working c onditions etc.  The aid is paid to consultant 
companies concerned for general administration cost  of the programme, such as salaries, travels, 
materials etc. 
 D. A
MOUNT OF STATE AID  
 Actual total expenditure in 2004:  ISK 16,0 million. 
 E. R
ULES AND CONDITIONS  
 The programme is available to all domestic fish processing companies. 
 F. D
URATION  
 No time limit, the amounts are decided on in the Budget each year. 
 
G. LEGAL BASIS  
 The Budget item no. 05-190.1.21. 
  G/SCM/N/123/ISL 
 Page 11 
 
 
 H. TRADE EFFECTS  
 It is not possible to measure trade effects and in  any case the fishing industry is outside of the 
EEA Agreement.   5. Regional Support 
5.1 Assistance to Employment Development Projects  
 
A. R
ESPONSIBLE AUTHORITY  
 Institute of Regional Development. 
 
B. POLICY OBJECTIVE  
 The objective of the programme is to assist  the economic development of the nationally 
assisted areas of Iceland.  The assisted projects are small and cover employment development, training and innovation. 
 
C. F
ORM OF STATE AID  
 Grants, as assistance to Employment Developm ent Projects, which fall within the objectives 
of Act No. 106/1999, on the Ins titute of Regional Development. 
 D. A
MOUNT OF STATE AID  
 Actual total expenditure in 2004:  ISK 120,22 million. 
 A total of 8 projects received grants.  E. R
ULES AND CONDITIONS  
 The programme is available to individuals, private companies, local development companies 
and municipalities.  The subsidies are subject to the conditions laid down in the EFTA Surveillance 
Authority State Aid Guidelines and the Map of Regional Aid approved by  the EFTA Surveillance 
Authority.  F. D
URATION  
 The programme has no time limit, the amount is decided on in the Budget each year. 
 
G. LEGAL BASIS  
 Article 10 of Act no. 106/1999 on the Institute  of Regional Development, the Budget, item 
no. 11-411.  
 
5.2 Assistance to Local Economic Development  
 
A. R
ESPONSIBLE AUTHORITY  
 Institute of Regional Development. 
 G/SCM/N/123/ISL 
Page 12  
 
 B. P
OLICY OBJECTIVE  
 The objective of the programme is to assist local economic development companies and to 
finance venturesome projects within the field of  local employment development and innovation. 
 C. F
ORM OF STATE AID  
 Grants to finance venturesome projects within the field of local employment development and 
innovation.  D. A
MOUNT OF STATE AID  
 Actual total expenditure in 2004:  ISK 22,43 million. 
 The amount was divided between 56 grants. 
 E. R
ULES AND CONDITIONS  
 According to Act No. 106/1999, on the Institute of Regional Development, the assistance is to 
be in accordance with rules laid down by the Minister of Industry .  These rules have not yet been 
issued.  The subsidies are subject to the conditi ons laid down in the EFTA Surveillance Authority 
State Aid Guidelines and the Map of Regional Ai d approved by the EFTA Surveillance Authority. 
 F. D
URATION  
 The programme has no time limit, the amounts are decided on in the Budget each year. 
 
G. LEGAL BASIS  
 Article 12 of Act no. 106/1999 on the Institute  of Regional Development, the Budget, item 
no. 01-221.  H. A
DDITIONAL INFORMATION  
 The Institute of Regional Development is authorized according to Article 11 of Act 
No 106/1999 to provide loans and guarantees, in accordan ce with the role of the Institute as stipulated 
in the Act.  These loans and guarantees are provided on market terms, with similar interest rates as on 
the open market.   6.  Temporary repayment of costs of films production in Iceland 
 
A. R
ESPONSIBLE AUTHORITY  
 Ministry of Industry. 
 
B. POLICY OBJECTIVE  
 The objective of the Act is to enhance domestic culture and promote the history and nature of 
Iceland by temporarily supporting motion pictures a nd television programmes produced in Iceland.  
  According to the Act authorisation is grante d for the reimbursement from the State Treasury 
of a proportion of the production costs incurred in  the production of films and television programmes 
in Iceland.   G/SCM/N/123/ISL 
 Page 13 
 
 
  
 When more than 80% of the total production co st of a motion picture or television programme 
incurs in Iceland, the reimbursement shall be calculated from the total production cost incurring 
within the European Economic Area.  
 Production costs refers to all costs incurre d in Iceland deductible from the revenues of 
enterprises pursuant to the provisions of the Act on Income and Net Wealth Tax.  Payments pertaining 
to employees and contractors are only to be included in  production costs if they are verifiable taxable 
in Iceland  
C. F
ORM OF STATE AID  
 A specific company shall be established in Icel and for the production; an Icelandic branch or 
agency of a company registered in another Member  State of the European Economic Area shall be 
considered a specific company  
D. A
MOUNT OF STATE AID  
 Total expenditure (reimbursement of pro duction cost) in 2004:  ISK 94,27 million. 
 E. R
ULES AND CONDITIONS  
 In assessing whether a proportion of the production costs of a motion picture or a television 
programme shall be reimbursed, the foll owing conditions shall be fulfilled: 
 
(a) the production shall be suited for promoting I celandic culture and the history and nature of 
Iceland; 
 (b) the production shall be suited for enhancing the experience, knowledge and artistic ambition 
of those involved in the production; 
 (c) a specific company shall be est ablished in Iceland for the production; an Icelandic branch or 
agency of a company registered in another EEA  member state shall be considered a specific 
company; 
 
(d) information on the principal parties involved in the film or television programme shall be 
submitted;  
 (e) information on domestic parties and their shar e in the production of the film or television 
programme shall be submitted; 
 
(f) an itemized estimate of the production costs and sources of funding shall be submitted, 
together with confirmation by the funding parties and a declaration by the producer to the effect that the production conforms with the aims of the Act No. 43/1999; 
 (g) information on the content of the proposed fi lm or television programme shall be submitted, 
including a manuscript, synopsis and information about filming locations; 
 (h) a production plan shall be available (i.e. filming, post-production and marketing plan), 
providing for completion of the production within three years of receipt of the application for reimbursement; 
 G/SCM/N/123/ISL 
Page 14  
 
 (i) a statement shall be submitted to the effect th at the material to be produced is intended for 
general distribution to cinemas or television st ations, the content of the film or television 
programme shall not violate the Film Censor ship and Prohibition of Violent Films Act, 
No. 47/1995, or Article 210 of the Criminal Code, No. 19/1940. 
 
F. D
URATION  
 The programme is limited to end of year 2006. 
 G. L
EGAL BASIS  
 Act on Temporary Reimbursements in Respect of Film Making in Iceland, No. 43/1999, with 
amendments.  Regulation on Temporary Reimburseme nts in Respect of Film Making in Iceland, 
No. 131/2001, with amendments.   
7.  Rural tourism 
 
A. R
ESPONSIBLE AUTHORITY  
 Ministry of Transport and Communication. 
 B. P
OLICY OBJECTIVE  
 The objective of the programme is to promote rural tourism and assist local museums, and 
places of historical importance, in attracting tourists. 
 C. F
ORM OF STATE AID  
 Grants to projects. 
 
D. AMOUNT OF STATE AID  
 Total expenditure allowed in 2004:  ISK 26,5 million. 
 E. D
URATION  
 The programme has no time limit, the amounts are decided on in the Budget each year. 
 
F. LEGAL BASIS  
 Budget, item no. 10.190.1.42, 1.45 and 1.48. 
 G. A
DDITIONAL INFORMATION  
 The EFTA Surveillance Authority is currently , following a complaint, examining State aid 
provided to promote Icelandic tourism (reference is made to Case No. 47859). 
   G/SCM/N/123/ISL 
 Page 15 
 
 
 8.  Aid to promote marketing of Icelandic tourism. 
 
A. RESPONSIBLE AUTHORITY  
 Ministry of Transport and Communication and Icelandic Tourism Board. 
 
B. POLICY OBJECTIVE  
 The objective of the programme is to promote marketing of Icelandic tourism.  Further 
reference is made to a correspondence with  the Authority concerning Case No. 47859. 
 C. F
ORM OF STATE AID  
 Grants to projects. 
 D. A
MOUNT OF STATE AID  
 Total expenditure allowed in 2004:  ISK 320 million. 
  
E. DURATION  
 The programme is intended to be temporary,  the amounts are decided on in the Budget each 
year.  F. L
EGAL BASIS  
 Budget, item no. 10.190.1.44. 
 
9.  Research fund 
 
A. TITLE 
 Research Fund. 
 The Science Fund expired in 2004 and has been  replaced by the Research Fund (reference is 
made to the above).  B. P
RIMARY OBJECTIVE  
 Research and development  
 
C. DESCRIPTION OF AID INSTRUMENT  
 The Research Fund is the most powerful tool of  the public sector for reinforcing the research 
community infrastructure through project grants b ased on applications from scientists, business firms 
and institutions.  The Science and Technology Po licy Council encourages the Fund to give young 
scientists an opportunity to establish their work  and contribute to the further accumulation of 
scientific and technical knowledge. 
  The Research Fund offers gran ts in accordance with the prio rities set by the Science and 
Technology Policy Council and the grants strategy defined by the Science Board based on a peer 
review evaluation of research project quality, the competence of the individuals involved and the facilities available for completing the project.  
 G/SCM/N/123/ISL 
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 D. E
XPENDITURE 2004 
 ISK 188,7 million. 
  
10. Technical Development fund 
 
A. T
ITLE  
 Technical Development Fund. 
 The Technology Fund expired in 2004 and h as been replaced by the Technical Development 
Fund (reference is made to the above). 
 
B. PRIMARY OBJECTIVE  
 Research and development. 
 C. D
ESCRIPTION OF AID INSTRUMENT  
 The Technical Development Fund is intende d to support technological development and 
research to support innovation in the economy of I celand.  The Fund will in general operate as a 
competitive fund through which firms, research ins titutes and universities will have the possibility of 
financing projects that support technological deve lopment and innovation.  The Fund is intended to 
give support to spin-off ventures and innovative fi rms to secure that economic benefits accrue to 
society from the scientific and technical know ledge and the innovation arising from these new 
ventures.  
  The Science and Technology Policy Council att aches high importance to close co-ordination 
between the Research Fund and the Technical Deve lopment Fund, as well as co-operation with other 
public funds and venture investors.  The Techni cal Development Fund can take the initiative to 
establish programmes and specific actions prepared  in consultation with the business community, 
research institutes and universities.  Finally, the T echnical Development Fund is permitted to enter 
into partnerships with venture capital investors fo r seed and early risk financing toward establishing 
firms which base their operations on technological  development and research and which involves a 
novelty to the economy.   
D. E
XPENDITURE 2004 
 ISK 170,31 million. 
 
__________