Iceland’s recession “is over”

IMF1An IMF delegation has been in Iceland for the last two weeks preparing the way for the Fund’s third review of its economic rescue package with the country.

The delegation has met, among others, with the government and has been examining budget plans for the next year under the assumption that the third review is completed at the end of this summer.

With the completion of the review, Iceland would gain access to ISK 100 billion (USD 786.5 million) of loan funds from the IMF, the Nordic countries and Poland.

The chairman of the delegation says he is pleased with the results which have been achieved in recent months:

“The recession is technically over; we have seen positive growth in the economy in the last part of 2009 and the beginning of this year,” Mark Flanagan said. He added that he understands that the general public probably do not perceive that the recession is over; there is a long way to go yet. There are, however, positive notes in the air that Iceland’s biggest problems are hopefully behind it, he said.

Visir.is reports that the delegation intend to spend two weeks acquainting itself with the recent Supreme Court decision that foreign currency indexed loans were illegal and what the implications of the ruling are. Flanagan said yesterday that at this stage it seems likely the banking sector can deal with the challenge adequately.

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