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What is the Icelandic króna (ISK)?

Credit Ratings & Outlook

In the latest credit ratings from December 1970, Moody's gives Iceland a Baa3 rating, with a negative outlook. Fitch has a stable outlook with a BB+ rating. Finally, S&P last issued a BBB- rating, with a stable outlook.

Sovereign credit ratings play an important part in determining a country’s access to international capital markets, and the terms of that access. Sovereign ratings help to foster dramatic growth, stability, and efficiency of international and domestic markets.

Central Bank Rate

The current central bank interest rate is 5.50%. This is higher than 2011, which was 4.75%.

GDP

In 2010 the total GDP was $12,574,305,880 in US Dollars, while the per capita GDP was $39,541. It fell by -4.00% over the previous year.

Unemployment

The latest unemployment rate for 2012 is 6.90%.

Consumer Price Index

The latest consumer price index for 2010 is 149.08.

Political Structure

The current head of the government is Prime Minister Jóhanna Sigurðardóttir, and the head of state is President Ólafur Ragnar Grímsson (in a ceremonial role).

Currency Details

The króna, or in plural form krónur , is the official currency used in Iceland. Often denoted by ISK, the name króna means “crown” – a meaning analogous to the name of several other Nordic currencies. The Icelandic króna became a currency separate from the Scandinavian krona after the ending of the Scandinavian Monetary Union, and after gaining independence from Denmark in 1918. The Central Bank of Iceland (Sedlabanki Islands) has controlled circulation of the króna since 1961 . In 1980 , the Icelandic króna was revalued, with 100 old krónur being worth 1 new króna. Technically the króna is composed of 100 aurar (singular eyrir ), although in practice coins of less than 1 Króna (and notes of 100 kronur or less) have not circulated for many years. In September 2002, the Icelandic Prime Minister signed two regulations, deciding that all monetary amounts on invoices and financial claims should be stated and paid in whole krónur only, and that coins of less value than one króna should be recalled from circulation. As of October 1st 2003 , Icelandic banks no longer accept the 5, 10 and 50 aurar coins. Before this, the 5 aurar coin was the least valued coin that was circulating in the world, worth approximately 0.06 Euro cent.

Moody’s Rating
Baa3, 11 Nov 2009
S&P Rating
BBB-

Sovereign credit ratings play an important part in determining a country’s access to international capital markets, and the terms of that access. Sovereign ratings help to foster dramatic growth, stability, and efficiency of international and domestic markets.

What does it look like?

Political Structure

The Icelandic parliament, Althing, was founded in 1845 with the purpose of advising the Danish king. However, due to its seeming attempt to reestablish the assembly founded in 930 in the Commonwealth period, the parliament was suspended in 1799. Currently, the parliament is comprised of 63 members, each of whom is elected by the population every four years. The president of Iceland serves as a diplomat, a figurehead and head of state. The head of government is the prime minister who, along with his cabinet, supervises and manages the executive part of the government. After general elections to the Althing, the president appoints the cabinet. (However, leaders of the political parties who decide which parties can form the cabinet and how its seats are to be distributed, usually end up conducting this process; this happens provided that there is majority support in Althing. Only when party leaders are unable to reach a conclusion on their own does the president exercise this power and appoint the cabinet himself.) The governments of Iceland have almost always been coalitions comprised of two or more parties, as a single political party has not received a majority of seats in Althing even once in its time as a republic. The president and cabinet are elected every four years (respectively in 2004 and 2003 last), and town council elections are held with this frequency as well (last in 2002).

Prominent Figures

Chief of State President Olafur Ragnar GRIMSSON (since 1 August 1996)
Head of Government Prime Minister Johanna SIGURDARDOTTIR (since 1 February 2009);
Cabinet Cabinet appointed by the prime minister
Elections president, a largely ceremonial post, is elected by popular vote for a four-year term (no term limits); election last held 28 June 2004 (next to be held in June 2012); following legislative elections, the leader of the majority party or the leader of the majority coalition is usually the prime minister note: the presidential election of 28 June 2008 was never held because Olafur Ragnar GRIMSSON had no challengers; he was sworn in on 1 August 2008 2004
Election Results Olafur Ragnar GRIMSSON elected president; percent of vote – Olafur Ragnar GRIMSSON 85.6%, Baldur AGUSTSSON 12.5%, Astthor MAGNUSSON 1.9%;

Key Economic Factors

Overview:

Iceland’s economy is capitalistic, yet has an extensive welfare system, low unemployment, and a remarkably equitable distribution of income. Iceland’s economy lacks natural resources (other than abundant geothermal power) and thus greatly depends on the fishing industry (which provides 70% of export earnings and is responsible for employing almost 10% of the work force). The economy is highly sensitive to declining fish stocks as well as fluctuations in world prices for aluminum and ferrosilicon, its main exports. Government policies include reducing the budget and current account deficits, limiting foreign borrowing, containing inflation, revising agricultural and fishing policies, diversifying the economy, and privatizing industries owned by the state. The government remains opposed to membership in the EU, as there is a large concern that Iceland may lose its fishing resources (which would lead to detrimental effects on the economy). As of late, Iceland’s economy has been diversifying into manufacturing and service industries in the last decade, and software production, biotechnology and financial services are on their way to development as well. Additionally, the tourism sector is expanding rapidly with recent trends in ecotourism and whale watching. As for overall growth, Iceland experienced steady growth from ’96 to ’01 (3-5%) but during the global recession, this growth could not be sustained in the years to follow.

Key Industries:

Fish processing, aluminum smelting, ferrosilicon production, geothermal power and tourism.

Agricultural Products:

Potatoes, green vegetables, mutton, dairy products and fish.

Import Commodities:

Machinery and equipment, petroleum products, foodstuffs and textiles.

Export Commodities:

Fish and fish products, aluminum, animal products, ferrosilicon and diatomite.

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