Scope Ratings assigns AA- long -term ratings to the Republic of Iceland with Stable Outlook
Scope Ratings has assigned the Icelandic Treasury an AA- credit rating in domestic and foreign currencies with a stable outlook. Scope Ratings is a European credit rating agency that assesses Iceland’s creditworthiness for the first time. The company began assessing sovereign creditworthiness in 2017 and has since grown and issued ratings for 38 countries. Scope is the only company of its kind in Europe that is recognized within the European Central Bank’s rating framework.
Scope Ratings’ assessment points out that the main strengths of the Icelandic economy are high income per capita, relatively low and declining public debt, a credible fiscal policy and the government’s strong commitment to responsible fiscal management. In addition, the external position of the economy is strong, which contributes to resilience to external shocks.
The main constraint on Iceland’s credit rating is its narrow export base and reliance on a small number of key sectors, which leaves the economy exposed to changes in global demand, terms of trade and exchange rate volatility. Furthermore, the Icelandic economy is characterised by greater volatility in key economic variables, such as GDP growth, inflation and domestic demand, compared with more diversified advanced economies.
