The ratings on Iceland are supported by its stable political institutions, a wealthy and flexible economy, and healthy public finances. The ratings remain constrained by very low levels of external liquidity, very high levels of external debt throughout the economy, and the off-budget and contingent liabilities of the government. Iceland boasts stable and flexible political institutions, which enjoy broad public backing, and has a long tradition of stable coalition governments. The country's wealthy and flexible economy generates one of the highest per capita GDPs in the world. Growth is forecast to average 3.8% in 2004-2007, dominated by the upcoming large-scale investment projects in energy and aluminum production. Public finances continue to be healthy. As a consequence of budget surpluses through
