Fitch upgrades Iceland’s credit rating

kronurFitch has further upgraded Iceland’s sovereign credit rating amid the country’s ongoing economic recovery. The agency announced last week that the island-nation had achieved a BBB rating – the organisation’s lowest demarcation of investment grade status.

Fitch officials said in a statement: “The Icelandic economy has displayed the ability to adjust and recover at a time when many countries with close links to Europe have stumbled in the face of adverse developments in the eurozone,” Reuters reports.

The credit rating firm also cited declining debt in the Icelandic economy, noting that debt as a percentage of GDP is expected to decrease from 96 percent in 2012 to just 69 percent by 2021.

Officials added, however, that it will likely be some time before Reykjavik is able to remove the capital controls that were put in place following the 2008 banking collapse, despite recent efforts to do so.

The statement read: “However, the longer capital controls remain in place, the greater the risk that they will slow recovery and potentially lead to asset price bubbles in other areas of the economy.”

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