Norwegian ex-CBI chief has advice for Iceland

Norwegian economist and ex-temporary director of the Central Bank of Iceland, Svein Harald Oygard says other European nations could learn from Iceland in their response to economic troubles.

Oygard told Aftenposten that other European nations could learn from Icelandic experience that it is not enough to concentrate on economic matters and reducing government deficits, without also stimulating economic growth.

Oygard praises Iceland for having dealt with the impacts of the banking crisis with grit and conviction, reviving the banking sector in a relatively short time and having turned state finances around.

The general public has, on the other hand, been in a very tight spot; with high unemployment and householders and businesses hit with crippling debt problems. Ways to stimulate economic growth must be sought, Oygard warns.

The exchange rate collapse of the Icelandic krona has compounded the country’s problems, the Norwegian believes. He says the euro serves states better in difficult times, because it can increase stability and international trust in the country’s financial system. It is possible to implement spending cuts and tax rises in line with international competitiveness in order to end recession, instead of needing to devalue a small currency like the krona.

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