IMF Mission Chief for Iceland Mark Flanagan, speaking by phone to the Iceland-American Business Council, called it a “major achievement” of Iceland to have resurrected its banks within a year.
Vísir reports that Flanagan also praised the Icelandic government for having coming farther than was expected in the area of reducing spending, and for the government’s economic plan. “What happened in Iceland is actually without precedent,” he responded, when asked how Iceland compares to other projects he has engaged in around the world.
Flanagan pointed out that elsewhere in the world, it has taken 24 to 36 months to stablilize the economy to the extent Iceland has been able to within a single year, and that it would have been “unrealistically optimistic” to have expected the banks to recover any sooner than they did.
There is still work to be done, though, he added. For example, the regulatory and supervisory aspects of the economic system needs special attention. That said, Iceland will receive a better deal from the IMF than other countries have. The IMF loan, which will total about 168 million USD, will come with an interest rate of 6.57% for the next 12 years.
Flanagan added that the IMF has no intention of involving itself in any discussions about heavy industry in Iceland; that this is a domestic matter. He does believe, however, that the Icelandic banking system is too large and needs to be reduced.