Iceland ‘A/A-1’ Ratings Affirmed; Outlook Stable
International rating agency S&P Global Ratings has affirmed Iceland’s sovereign ratings at A/A-1 with a stable outlook. The rating agency expects the pandemic to cause Iceland’s economy to contract by 7.8% in 2020 before partially recovering by 4% in 2021. Despite the significant hit to the tourism sector, S&P expects that Iceland’s current account balance will remain in surplus over the next few years. The rating agency believes that the authorities will be able to consolidate public balances after 2021 and note the successful track record of fiscal deleveraging over the past decade. Resilient external balances and low net external leverage provide further economic buffers.Iceland’s stable institutional framework and effective policymaking continue to support the rating. The volatile nature of the small and open...