Iceland’s credit ratings lowered Skip to content

Iceland’s credit ratings lowered

Standard & Poors’ Rating Service lowered its foreign currency sovereign credit ratings on the Republic of Iceland from AA- to A+ last week.

At the same time, the long-term local currency rating on Iceland was lowered from AA+ to AA and the short-term local currency rating was affirmed at A-1+, as reported on vb.is.

According to Standard & Poors, the Icelandic government’s support of the economic system is insufficient and the finance bill for next year shows signs that elections are coming up. RÚV reports.

The credit rating company said the government’s finance bill supports expansion in society and is at odds with measures taken by the Central Bank to fight the growing inflation.

Prime Minister Geir H. Haarde told RÚV that the credit rating service’s decision was “unfortunate and unexpected,” especially as Moody’s Investors Service had affirmed its former evaluation of Iceland’s foreign credit ratings and given it the highest score possible.

The Prime Minister said he disagreed with Standard & Poors’ conclusion and the service’s evaluation of the government’s finance bill, which, among other things, includes a reduction of food prices.

Bjarni Ármannsson, director of Glitnir Bank, told RÚV that the Icelandic government should take Standard & Poors’ evaluation seriously. The rating service did not lower its ratings on Glitnir, which is the only Icelandic bank that it evaluates.

Ármannsson pointed out that other credit rating services like Fitch and OECD have rated Iceland in the same way as Standard & Poors, and therefore, he said, the government should not be surprised by its evaluation.

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