The Icelandic economy is better, the risk remains, says IMF
Posted by admin | Under advertising, blog, business opportunity, profitable, work Monday Jun 28, 2010The Icelandic economy is technically out of recession but the risk remains and the financial sector is still subject to uncertainty after a court decision on loans related to exchange rates, said the International Monetary Fund.
The IMF said it expected that the recovery of the Icelandic economy takes its momentum through the rest of the year, but said a decision by the Supreme Court of the country presented a number of risks .
"The stability of the system is not in jeopardy because of the coverage of government guarantees," said Mark Flanagan, Director of the IMF mission in Iceland.
"However, the decision (on loans) could have an impact on public finances, the pace of liberalization of capital control and other aspects of the program."
The highest Icelandic court ruled June 16 that some loans related to exchange rates of foreign currencies were illegal. Borrowers would therefore have no obligation to repay the principal of their loans as the Icelandic currency.
This decision poses a risk that creditors may large losses for the Irish crown plunged after the collapse of the Icelandic banking system there nearly two years.