IMF: Iceland is stabilising as debt crisis eases

ICELAND’S economy has stabilised further and measures to ensure a restructuring of debt on the crisis-hit island remain vital, the International Monetary Fund (IMF) said yesterday.

The top three Icelandic banks collapsed in October 2008 and the country needed a bailout led by the IMF.

“Iceland’s post-crisis stabilisation is continuing, supported by a steady implementation of programme policies,” the IMF said in a statement after the end of talks on a review of economic measures that accompanied the bailout.

Fund mission chief Julie Kozack said while broad agreement had been reached on policy measures that could deliver the goals set in the bailout, more time was needed to assess measures under consideration to restructure household debts.

She said an acceleration of corporate and household debt restructuring in an affordable way was vital to the recovery and sustainable growth.

The IMF was referring to measures being considered by the government to bring relief to indebted homeowners who have suffered during the downturn. The plight of the homeowners and fears of widescale evictions sparked two demonstrations against the authorities in October.