{
  "title": "Iceland: 2024 Article IV Consultation-Press Release; and Staff Report",
  "publication": "IMF Staff Country Reports, July 15, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2024/07/15/iceland-2024-article-iv-consultation-press-release-and-staff-report-551849",
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  "summary": "The 2024 Article IV Consultation with Iceland highlights that following an impressive recovery from shocks in recent years, tight monetary and fiscal policies have slowed domestic demand growth, strengthened the current account, and started to lower inflationary pressures.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Following an impressive recovery from shocks in recent years, tight monetary and fiscal policies have slowed domestic demand growth, strengthened the current account, and started to lower inflationary pressures.\n- A coordinated tightening of macroeconomic policies has successfully narrowed domestic and external imbalances built up during the post-pandemic period.\n- Appropriately tight macroeconomic policies are expected to dampen economic growth in the near term, while medium-term growth prospects are favorable.\n- Reactivation of the fiscal rules in 2026 presents an opportunity to revisit their design to ensure fiscal policy is both sustainable and contributes to macroeconomic stability.\n- An application of the IMF’s Integrated Policy Framework to Iceland suggests some benefits of foreign exchange interventions during times of stress.\n- Structural policies should focus on gradually reducing state involvement in collective wage bargaining, accelerating the green transition, and further diversifying the economy."
    },
    {
      "heading": "Key findings and outcomes",
      "content": "- Tight monetary and fiscal stance has:\n  - slowed domestic demand growth;\n  - strengthened the current account;\n  - started to lower inflationary pressures.\n- Coordinated policy tightening narrowed domestic and external imbalances accumulated in the post-pandemic period.\n- Medium-term growth prospects are favorable despite near-term dampening from tight policies."
    },
    {
      "heading": "Policy recommendations and options",
      "content": "- Maintain appropriately tight macroeconomic policies in the near term to continue addressing inflationary pressures and external imbalances.\n- Reactivate and revisit fiscal rules in 2026 to ensure:\n  - fiscal policy sustainability;\n  - fiscal policy contributes to macroeconomic stability.\n- Consider targeted foreign exchange interventions during times of stress, as suggested by the IMF’s Integrated Policy Framework application to Iceland.\n- Structural policy priorities:\n  - gradually reduce state involvement in collective wage bargaining;\n  - accelerate the green transition;\n  - further diversify the economy."
    },
    {
      "heading": "Analytical tools and frameworks",
      "content": "- IMF’s Integrated Policy Framework applied to Iceland indicates some benefits of foreign exchange interventions during times of stress.\n\n---\n\n Content in this bundle\n\n- 1islea2024001-print-pdf\n  - 1islea2024001-print-pdf (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1islea2024001-print-pdf (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: July 15, 2024",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400282560.002",
    "Following an impressive recovery from shocks in recent years, tight monetary and fiscal policies have slowed domestic demand growth, strengthened the current account, and started to lower inflationary pressures.",
    "A coordinated tightening of macroeconomic policies has successfully narrowed domestic and external imbalances built up during the post-pandemic period.",
    "Appropriately tight macroeconomic policies are expected to dampen economic growth in the near term, while medium-term growth prospects are favorable.",
    "Reactivation of the fiscal rules in 2026 presents an opportunity to revisit their design to ensure fiscal policy is both sustainable and contributes to macroeconomic stability.",
    "An application of the IMF’s Integrated Policy Framework to Iceland suggests some benefits of foreign exchange interventions during times of stress.",
    "Structural policies should focus on gradually reducing state involvement in collective wage bargaining, accelerating the green transition, and further diversifying the economy.",
    "Tight monetary and fiscal stance has:",
    "Coordinated policy tightening narrowed domestic and external imbalances accumulated in the post-pandemic period.",
    "Medium-term growth prospects are favorable despite near-term dampening from tight policies.",
    "Maintain appropriately tight macroeconomic policies in the near term to continue addressing inflationary pressures and external imbalances.",
    "Reactivate and revisit fiscal rules in 2026 to ensure:",
    "Consider targeted foreign exchange interventions during times of stress, as suggested by the IMF’s Integrated Policy Framework application to Iceland.",
    "Structural policy priorities:",
    "IMF’s Integrated Policy Framework applied to Iceland indicates some benefits of foreign exchange interventions during times of stress.",
    "**1islea2024001-print-pdf**"
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