| Summary: | Iceland’s gross external debt rose above 600 percent of GDP, while households and corporations accumulated heavy debt burdens with large exposures to foreign exchange and inflation risk. The global banking crisis exposed Iceland’s vulnerabilities, triggering a balance-of-payments crisis, a collapse of the exchange rate and output, and the failure of financial and many nonfinancial firms. The importance of accelerating the restructuring of banks’ operations and balance sheets and also policy frameworks has been stressed. The downward trend in inflation is welcomed. Debt restructuring;Debt sustainability analysis;Economic growth;Capital controls;Banking sector;Article IV consultation reports;Fiscal consolidation;Economic indicators;Staff Reports;Performance criteria modifications;Private sector;Public information;Iceland;Fiscal policy;Monetary policy;debt, interest, external debt, central bank, budget
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