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Iceland is working its way up nicely and steadily

Wednesday, 16 November 2011
The difference between a banana republic such as Zimbabwe and a small civilised country such as Iceland is that when both of them went down economically, Zimbabwe will never get back to its great hay days but Iceland is gradually regaining its world class economy.

After its economy collapsed in 2008 as the financial crisis dug deep and took a chuck out of its economic life, Iceland is making a gradual and steady formidable comeback.

Evidence to this is that Iceland's budget deficit is expected to shrink to 3 percent as early as 2012 and in two years, the country is set for surplus. This comes from the review of credit rating agency Moody's.


Growth and inflation have already been identified as major problems for Iceland by its central bank, Sedlabanki, which two weeks ago raised Iceland's policy rate. And in the market, there is growing feeling that the government in Reykjavik will soon balance its books, rumour is now spreading that the Icelandic government bonds will soon be coming out.

Counting off funding and look at the so-called primary balance deficit in the state budget has already gone this year, according to a recent report from Moody's, in which praise the country’s spectacular turnaround.

The greatest threat to the Island is the present declining world economic activity, which could hit exports of fish and aluminium, according to Moody's.

Not even the debt to the UK and the Netherlands - who came as a result of the billions lost in 2008 by Icelandic bank in the Icesave financial deals saw that looses and  which Iceland must pay beck and has pledge a deposit guarantees to savers is not looking to be a problem.

The debt can be paid by recoveries from the bankruptcy of the assets of the banking group Landsbanki, which ran the online Icesave saving accounts.

According to Moody's it is expected that repayments will come in again by the beginning of 2012.
By Team

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