Moody's revises up Iceland’s rating to A1 with stable outlook
Date
9/22/2024 9:37:54 AM
(MENAFN) Moody's announced on Friday that it has upgraded Iceland's local and foreign currency long-term issuer ratings from A2 to A1, while adjusting its outlook from positive to stable. This upgrade is attributed to the government's improving fiscal metrics, which include a significant reduction in the budget deficit and a clearly established downward trend in the government debt ratio since it reached its peak in 2020. Moody's highlighted these improvements as indicative of a stronger economic position for the country.
The rating agency noted that the combination of tight monetary and fiscal policies has begun to curb high inflation rates. As inflation moderates, the government’s debt affordability metrics are expected to improve in the coming years, enhancing the overall economic outlook. The change to a stable outlook indicates a balance of risks that align with the A1 rating level, suggesting that Iceland’s economic conditions are becoming more predictable.
Moody's further expressed optimism regarding the continuation of fiscal consolidation, projecting that this trend will align with the medium-term fiscal plan set by the government. The statement indicated that the Icelandic economy is anticipated to rebound robustly next year following a temporary slowdown in the current year, which is a result of the stringent monetary and fiscal measures aimed at cooling an overheated economy.
Overall, the upgrade to A1 reflects confidence in Iceland's fiscal management and economic resilience, while the stable outlook underscores the need for continued diligence in maintaining balanced economic policies to support future growth.
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