Today, rating agency S&P Global affirmed its long- and short-term foreign and local currency sovereign credit ratings on the Republic of Iceland as A/A-1 with a stable outlook. According to the rating agency this rating reflects the country’s strong institutional framework and general policymaking effectiveness, comparatively low net general government debt at 30% of GDP and high per capita income levels. The rating agency also said that the ratings are constrained by Iceland’s vulnerability to external developments as well as typically high volatility throughout the economic cycle in addition to risks stemming from overheating in the domestic economy.
According to S&P the stable outlook balances the risks stemming from the domestic economy overheating against the potential for more rapid improvements in the government and external balance sheets over the next few years.
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