Moritz Kraemer, S&P’s managing director for Europe, the Middle East and Africa, in a telephone interview with Bloomberg, has said that Iceland’s credit risk may rise considerably. Minister of Business Gylfi Magnússon told reporters that he disagrees with S&P’s assessment.
In the Bloomberg interview, Kraemer says, among other things, that the president’s veto “made it clear that predictability of policy implementation in Iceland is not what we thought it would be”. He also said he believes loans from the IMF could be in jeopardy as a result, and that the government might even collapse.
It should be noted that, at the time of this writing, not only have both Prime Minister Jóhanna Sigurðardóttir and Minister of Finance Steingrímur J. Sigfússon said that they intend to hold the coalition together, their respective parties – the Social Democrats and the Leftist-Greens – have also given their support to the partnership, and most Icelanders overall believe the government will hold.
Magnússon, speaking to Vísir, said that the government has expected a negative reaction from financial analysts since the veto occured, but said there’s little they can do about outside criticism but accept it. He added that the government is doing everything in its power to turn the economic situation around. Magnússon also sees no reason to believe a loan from the IMF is in jeopardy.
Yesterday’s meeting between party chairmen to try and come to a consensus on a new Icesave deal ended without an agreement. The chairmen are expected to meet again this week.