Fitch on Iceland: from negative to stable
Today, Fitch Ratings has raised its outlook on Iceland from negative to stable. This indicates that Fitch has concluded that the rejection of the Icesave agreement with the UK and the Netherlands will not stall the economic recovery. After steep contraction it now seems that the Icelandic economy is finding some stability, possibly even the forecasted growth of about 2% this year. Fitch affirmed its foreign and domestic issuer ratings at BB+ and BBB+ respectively.
Fitch’s Paul Rawkins, Senior Director in the Sovereign Rating Group, said in a statement that solving the Icesave issue was an important step towards the normalisation of relations with international creditors. “However, the capacity of this dispute to close off access to multilateral and bilateral funding for Iceland’s IMF financial rescue programme and put Iceland’s economic recovery at risk has clearly diminished,” Rawkins said.
Mar Gudmundsson Governor of the Central Bank of Iceland welcomed Fitch’s credit rating though he underlines that had the Icesave agreement gone through the rating wouldn’t have landed on stable but improved.
Gudmundsson was in Brussels today where he gave a talk at Center for European Policy Studies on Shocks, adjustment, recesson and recovery in Iceland.
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