Iceland and IMF part company

The International Monetary Fund decided at a meeting this week that conditions are right to end its Icelandic financial revival programme on schedule at the end of this month. The final tranche of funding was also approved by the board.

Unemployment is still high in Iceland, but the rate increased slower than had been feared and has not been lower since before the banking crash, Icelandic government ministers explained at a press conference. The programme of co-operation between the IMF and the Icelandic government is now officially at an end, Visir.is reported.

The end of the programme means not only that loan payments to Iceland are now complete and no further IMF funding is expected; it also means that the IMF’s permanent presence in Reykjavik and its strong influence on government policy will also come to an end.

The ministers continued that as well as lowering unemployment, Icelanders’ domestic purchasing power is also increasing again and has not been higher since the crash.

According to the government, Iceland’s co-operation with the IMF has strongly emphasised the achievement of results in core areas. Financial stability has been regained. The financial sector has been revived and restructured. State finances have been stabilised through spending cuts and tax rises and the state’s increasing renewed respectability on international markets has been illustrated by June’s successful bond issue, ministers say.

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