Strasbourg, 26.06.2012 - Iceland’s Economic Affairs Minister Steingrímur Sigfússon told members of the Council of Europe’s Parliamentary Assembly that there is “an end to the tunnel” in the current economic crisis, because Iceland lived through it – and not with austerity alone.

After outlining events that led to a complete financial collapse in Iceland in 2008, with massive devaluation of the Krona and unemployment rising from virtually zero to 9% in two years, he said that the deficit and debt have come down, unemployment has fallen back to 6 percent and growth is back. IMF loans are being paid back earlier than expected.
 

In addition to having taken austerity measures – cutting expenditures – Iceland also increased taxes in a progressive three-bracket tax system, raised capital gains and alcohol and tobacco taxes – and even introduced a wealth tax.

Mr. Sigfússon advised that in working with international institutions, it is important to “own” the aid programme as much as possible. The IMF “saw that we were serious people” and decided to “adapt to our needs, because we wanted to preserve the Nordic welfare system”.

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Video of the speech