More Icelandic Families in Financial Troubles Skip to content

More Icelandic Families in Financial Troubles

At least 35% of Icelandic homes are now thought to be in great trouble, according to Marínó G. Njálsson, a spokesman for Hagmunasamtök heimilanna, a society representing those families, who are in financial troubles.

Prime Minister Jóhanna Sigurdardóttir. Photo: Páll Kjartansson/Iceland Review

Njálsson claims that the financial woes of families are growing and that the Central bank understated the problem in its report on financial stability Morgunbladid reports. “Rescue packages” have been overvalued by the government.

When the Icelandic krona lost about half of its value in 2008 this had an impact on many families and companies in Iceland. Many had taken loans in foreign currency to escape the high Icelandic interest rates. Even those who had Icelandic loans have not escaped problems, for those loans are indexed to the consumer price index, which has risen about 30% from January 1 2008. Salaries have increase much less and many are working less overtime. Taxes have increased. All of this mean that spendable income has gone down in real terms about 15% in two and a half years.

Prime Minister Jóhanna Sigurdardóttir said in Althingi, Iceland’s Parliament, this week that according to the Central bank report the collapse of the banking system had not lead to greater problems for 9.000 families as had been previously thought, if the government provisions had not come into play. Njálsson disagrees and says that the Prime Minister’s statements are grossly misleading.

According to a survey that Capacent made for Creditinfo that only one third of those in financial problems had utilized the options that are available to those who have big debts. At the same time the majority says they need more support.

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