NEW YORK Feb 14 Fitch raised Iceland's
sovereign credit rating one notch to BBB on Thursday, citing the
country's "impressive" progress in recovering from the 2008-09
The outlook on the credit is stable.
The agency cited continued growth in Iceland's economy, with
budget consolidation on track and a drop in the ratio of public
debt to the economy, as well as other signs of improvement.
Moody's Investors Service last week raised the country's
sovereign outlook to stable from negative. Moody's rates the
Standard & Poor's rates the country BBB-minus with a stable
"The Icelandic economy has displayed the ability to adjust
and recover at a time when many countries with close links to
Europe have stumbled in the face of adverse developments in the
eurozone," Fitch said in its statement.
The firm added that it expects to see debt as a portion of
gross domestic product decline to 69 percent by 2021, down from
an estimated 96 percent of GDP in 2012.
Earlier this week, Iceland's central bank governor Mar
Budmundsson said the bank would intervene to ensure as little
depreciation as possible in its weakening currency due to
inflation concerns but will draw no line in the sand for the
Fitch's upgrade, pushing it further into investment grade
territory, is indicative of an economy making steady progress
after getting crushed by the 2008-09 banking crisis.
The economy has bounced back better than many European
economies after a huge fall in the crown, the imposition of
capital controls and avoiding expensive bank rescues.
The central bank forecasts 2012 gross domestic product
growth of 2.2 percent rather than 2.5 percent expected in
November and for 2.1 percent this year rather than 3 percent.
Fitch said Iceland's exit from capital controls will be a
lengthy process, given the underlying risks to macroeconomic
stability, fiscal financing and the newly restructured
commercial banks' deposit base.
"However, the longer capital controls remain in place, the
greater the risk that they will slow recovery and potentially
lead to asset price bubbles in other areas of the economy,"