Moody’s Investors Service announced, Monday, that it had moved the country’s credit rating up a notch to Baa2, citing an improved outlook to the economy and credit-worthiness over the next four years.
While the rating is still just two notches from ‘junk’ status, it’s a positive sign for Iceland after years of capital controls and strict fiscal management in the wake of the disastrous 2008 financial crisis fallout.
The country recently emerging from imposed capital controls to manage what was described by the IMF as the biggest banking failure, relative to economy size, in history.
Moody’s point to Iceland’s stricter regulatory policies by the central bank and financial regulatory authorities to “prevent a similar future crisis.
“In Moody’s view, the steps that the Icelandic authorities have taken in this context are meaningful,” the ratings firm said.
Iceland has been commended for the manner in which it managed its financial collapse, certainly in comparison to the unfolding drama in Greece. Its GDP is now expected to grow by 7-8 per cent annually.
The upgrade brings Moody’s ratings on Iceland in line with those from Fitch Ratings had already upgraded Iceland to Baa2, while Standard & Poor’s Ratings Services still has the country at 1 level lower. Moody’s confirmed its outlook as stable.