The ratings on the Republic of Iceland reflect Standard&Poor's Ratings Services' view that Iceland's near-term financial outlook has stabilized since the electorate resoundingly rejected legislation at a referendum in early March that would have required the country to compensate the Netherlands and the U.K. for their deposit insurance outlays after the failure of Icelandic Internet bank Icesave. In our view, the government coalition is likely to remain in place for the remainder of this year, reducing the risks of a policy vacuum. The current account has swung into a surplus and the currency has appreciated 4% against the euro since the beginning of January. Moreover, the central bank has cut its policy rates twice this year and official
