Standard & Poor’s: Republic of Iceland. Outlook revised to stable from negative on receding fiscal risk
On January 24, 2014, Standard & Poor's Ratings Services revised the outlook on the Republic of Iceland to stable from negative. At the same time, S&P affirmed their 'BBB-/A-3' long- and short-term foreign and local currency sovereign credit ratings on Iceland.
S&P estimates that Iceland's proposed mortgage debt relief program will have a cumulative fiscal cost of about 6% of GDP over the next four years. It is expected that the government will finance the program through increased taxation and not higher deficits. Therefore, the outlook on Iceland is being revised to stable from negative. At the same time, S&P affirms its 'BBB/A-3' ratings on Iceland. The stable outlook reflects a balanced risk from the continued economic recovery and the uncertainties related to the lifting of capital controls.
See further information in the announcement from Standard & Poor’s.