IMF: Iceland Can Handle Debt Skip to content

IMF: Iceland Can Handle Debt

Mark Flanagan, the representative of the International Monetary Fund (IMF) in Iceland, announced yesterday that according to the latest information, the state’s debt is lower than predicted and it is assumed that it is manageable.

Photo by Páll Stefánsson.

An IMF delegation has been in Iceland for two weeks and held a press conference yesterday, Morgunbladid reports.

The reason for the debt being lower than expected is that the refinancing of the banks didn’t cost as much as originally assumed.

However, the accumulated debt of the private sector is higher than predicted, which raises the overall debt situation of the national economy.

The foreign debt of the national economy is now between 307 and 350 percent of the gross domestic product (GDP), probably closer to 307 than 350 percent.

It appears as if the recession in GDP this year will be lower than initially predicted, Flanagan said. Instead of a ten percent recession, a recession of seven or eight percent is now expected. It is assumed that economic growth will resume next year.

Overall, matters are developing in keeping with the economic stabilization program.

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