Minister of Finance Steingrímur J. Sigfússon believes Iceland’s economy has reached “a turning point”, and that all data indicates that the country is a safe place to lend money to.
“We’re at an important turning point in many ways,” Steingrímur told Bloomberg. “We’re mainly trying to present our own case, which we think is good enough to make a convincing story that Iceland is a safe place to lend money to.”
The evidence for this assertion is based on comparison to European countries who have been in similar situations. Bloomberg reports that Iceland “has enjoyed CDS rates lower than Spain since November and below Portugal’s since August,” adding that “The western world’s hardest-hit economy at the peak of the credit crisis is now outperforming euro members Ireland and Greece after the krona’s freefall revived exports and as multiple bank failures left bondholders bearing the brunt of losses instead of the state.”
It should be noted that the picture is not all rosy. Iceland still needs to refinance 218 million euros, and needs to make a 120 million euro payment on its IMF loan. Iceland is also rated BB+ by Fitch Ratings, effectively making it “junk”, and Standard & Poor’s has given Iceland its lowest investment-grade ratings.
Nonetheless, Iceland’s economy also experienced growth in the previous quarter, for the first time in two years. Steingrímur sees this as a cue to move forward. “The economy is turning to growth and we think it’s about time to start seriously preparing to make a move on the international financial markets,” he said in part. “The long-term developments have been very favourable and the CDS on Iceland is now lower, or around the same, as it was well before the banking crisis.”
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