No Crisis in Rural Iceland Skip to content

No Crisis in Rural Iceland

By Iceland Review

Small communities in rural Iceland have neither been affected by the current economic crisis nor were they included in the period of expansion before the crisis arrived. Many of these communities have plenty of jobs available.

“We need people in most work places in town. We need a nurse, a youth and culture representative and workers to fill most jobs both at sea and on land,” Björn Ingimarsson, head of Langanesbyggd municipality in northeast Iceland, told Morgunbladid.

Thórshöfn in Langanesbyggd is one of the communities from which people have moved away in the past years, but the remaining inhabitants (the entire municipality has a population of less than 500) have not been hit especially hard by the crisis.

Iceland’s three largest commercial banks which have now been nationalized, Glitnir, Landsbanki and Kaupthing, did not grant inhabitants of rural Iceland loans to purchase apartments, neither in ISK nor foreign currency.

People who have high mortgages are suffering the hardest blows at the moment. If they have loans in ISK they are indexed and grow with the inflation and if they have loans in foreign currencies they grow even faster because of the depreciation of the ISK.

Ingimarsson said Iceland’s rural communities are therefore better prepared to face the banking crisis than the country’s larger urban areas. “Sparisjódurinn [savings bank] has served the economy here well and supported it and it is blooming now.”

Halldór Halldórsson, chairman of the Association of Local Authorities in Iceland, said municipalities in rural Iceland, which suffered during the period of expansion, can pay a key part in the reconstruction period of Icelandic society in the following years.

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