2008 Global Financial Crisis In Iceland

Iceland was the first victim for the 2008 global financial crisis. The first country to take a loan from IMF was Iceland. Iceland being a small country has a population of only 3, 00,000. $20billion would have been sufficient for its small economy to come out of the financial crisis but it didn’t have that money. Iceland was going through a difficult time due to which not only the citizens of the country but the financial institutions and the Nordic culture were devastated. The citizens of the country were in a shock when their Prime Minister who served from 2006 to 2009, Minister Geir Haarde told them that bankruptcy is going to hit the country. The entrepreneurs were investing the US market and Scandinavia. They also continued financing in …show more content…
The revenues of the country have also shown a rise due to their massive fishing industry.42% of exports done is under the fishing industry. It is therefore become one of the most important sources of income in today’s date. Energy intensive industries were attracted to Iceland and started setting up industries due to their geothermal energy. The quick recovery of the banking system and the steady fiscal adjustment has also helped in the recovery of Iceland. Also they did not lose confidence after the depreciation of their currency krona and maintained the …show more content…
However this is only possible with the removal of the capital controls. Though these controls help to stabilize the economy but they also lead to a disrupting effect. Their macroeconomic costs also tend to increase within time. The authorities are well informed about the stability of the economy. So, they have been planning on the reforms and the strategies regarding the capital controls and are expecting to see a progress this year. Talking about the fiscal policy, fiscal buffers play an important role and are essential when an economy is going through financial crisis. So the government planned to rebuild the fiscal buffers using the fiscal policies. Fiscal policies are also now being used in order to motivate growth and development in the country, particularly the sectors such as health, education and roads. Also revision of the direct and indirect taxes is being done. Independence of the central bank and strengthening the budgetary system has proven one of the most important issues to be worked