While help from the IMF is good, says Fitch Ratings, the most important thing for Iceland to do right now to regain investor confidence is to the settle the Icesave issue.
Senior Director and Iceland Expert Paul Rawkins told RÚV that the loan from the IMF will help pay down the debt Iceland owes other countries. However, Rawkins does not believe that Iceland’s economy is improving, nor does he think the crown will strengthen in the next week or months, although the financial help from the IMF and others will help stabilize the crown in the short term. Having said that, he believes Iceland’s economy is in harmony with what could be expected during a global financial crsis.
Rawkins has long written of and studied Iceland. On the Central Bank’s own website, in an article from 2006 – wherein Fitch had downgraded Iceland to a negative outlook – Rawkins writes in part, “Fitch draws comfort from the confidence-building developments that have occurred in the financial sector, but continues to view with concern Iceland’s macroeconomic imbalances and the manner in which they may ultimately unwind.”