Prime Minister Sigmundur Davíð Gunnlaugsson has dismissed concerns from the International Monetary Fund (IMF) that his debt relief package could stress the economy, saying that the IMF does not have a good track record “in many, if not most, countries”.
Vísir reports that the subject was raised in parliament today by Bright Future chairperson Guðmundur Steingrímsson, who asked the Prime Minister what his response was to recent criticism from the IMF that the PM’s debt relief package could stress the Housing Financing Fund (HFF) and increase inflation.
“This isn’t really new,” the Prime Minister said. “The IMF has expressed opposition to public debt relief in recent years. For my part, I have many times said I am completely opposed to the politics of the IMF, which has unfortunately not done especially well by homes in many, if not most, countries where the IMF has gotten involved.”
Daria Zakharova, the IMF mission chief in Iceland, told reporters yesterday that, “The household debt relief program will increase risks related to the HFF, because it will increase prepayments of mortgages held with the HFF. This will further aggravate its negative carry and it will require increased capital injections from the budget.”
The Prime Minister contends, though, that according to figures from the Central Bank, inflation should only be “a little bit higher”, but will not have a significant effect on the economy.
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