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IMF Mostly Happy With Iceland

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IMF Mostly Happy With Iceland

Photo: Geir Ólafsson.

The International Monetary Fund says Iceland needs to work to maintain financial stability during the removal of capital controls and to ensure inflation remains stable.

The head of the IMF’s Iceland delegation states that the country will this year become the first European victim of the banking crisis to be better off than it was before the crisis hit, RÚV reports.

The new IMF report, the fifth on Iceland since the country ended its formal economic plan with the Fund, paints a largely positive picture of the Icelandic economy.

A more solid economic outlook means growth is forecast, as well as stable inflation and lowering sovereign debt.

It’s not all roses, though, as slowing global growth, pressure to rapidly increase wages, and uncertainty over the removal of capital controls are all causing concern. The report especially emphasizes the need to maintain stability while the controls are removed—which is no easy task.

The Iceland committee recommends initiatives to increase manufacturing and the competitiveness of the Icelandic workforce, while the Central Bank of Iceland is encouraged to fight against large wage increases across the board and continue to increase its foreign currency reserves.

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