OVERVIEW We estimate that Iceland's proposed mortgage debt relief program will have a cumulative fiscal cost of about 6% of GDP over the next four years. We expect the government to finance the program through increased taxation and not higher deficits. We are therefore revising the outlook on Iceland to stable from negative. At the same time, we are affirming our 'BBB-/A-3' ratings on Iceland. The stable outlook reflects what we see as a balanced risk from the continued economic recovery and the uncertainties related to the lifting of capital controls. RATING ACTION On Jan. 24, 2014, Standard&Poor's Ratings Services revised the outlook on the Republic of Iceland to stable from negative. At the same time, we affirmed
