Iceland; Stand-By Arrangement: Interim Review Under the Emergency Financing Mechanism

• Main Author: International Monetary Fund
• Format: Report
• Language: unknown
• Subjects: Iceland
• Online Access: http://www.imf.org/external/pubs/cat/longres.aspx?sk=22696

This paper describes the Stand-By Arrangement for Iceland under the Emergency Financing Mechanism. The crisis is producing a sharp contraction of economic activity. Indicators of consumption are plummeting, and the deterioration in the labor market is accelerating, with rising unemployment and falling real wages contributing to a considerable contraction in real incomes. Significant import compression is under way, allowing a sustained turnaround in the trade balance, as exports continue to benefit from a weaker króna. The króna interbank market is inactive, and equity markets remain under pressure with trade being thin. Banking sector;Capital markets;Emergency financing mechanism;Exchange rate regimes;Economic indicators;Financial sector;Financial crisis;Monetary policy;Iceland;Fiscal policy;Stand-by arrangement reviews;central bank, foreign exchange, banking, external debt, recapitalization