We view Iceland as having the institutional capacity to address financial sector problems and build an environment more conducive to job creation and sustainable economic growth. We expect the economy to continue to expand by 2%-3% annually between 2012 and 2015. External and public-sector debt levels are high but we expect fiscal consolidation to continue. We are affirming our 'BBB-/A-3' long- and short-term sovereign credit ratings on Iceland. The stable outlook balances our view of Iceland's improved economic fundamentals with downside risks associated with capital controls being lifted over the next few years. On Oct. 17, 2012, Standard&Poor's Ratings Services affirmed its 'BBB-/A-3' long- and short-term sovereign credit ratings on the Republic of Iceland. The outlook is stable.
