Stable and mature political institutions Very high per capita income and strong long-term growth prospects Healthy public finances and a rapidly declining public debt burden Inadequate fiscal and monetary policy mix in management of macroeconomic imbalances Significant contingent fiscal risks from high level of external debt and weak external liquidity Small, relatively undiversified, and volatile economy The ratings on the Republic of Iceland are supported by its stable and flexible political institutions. They are key building blocks in the economy's high level of prosperity, which is among the highest of rated sovereigns, with a GDP per capita forecast to reach $57,740 in 2007. At the same time, economic growth has remained high, averaging 6.4% over the period 2004-2006 during the
