The ratings on Iceland are supported by our opinion of its prosperous and flexible economy, and its institutional capacity to address financial sector problems and build an environment more conducive to full employment and sustainable economic growth. The rapid post-crisis adjustment, on both the fiscal and external accounts, has allowed Iceland to complete the IMF program and regain market access, with its foreign currency debt maturity extended up to ten years. The ratings on Iceland are constrained by high external and public-sector debt that we believe could become higher still, if not for capital controls limiting residents' right to invest overseas and nonresidents' ability to exchange krona holdings for foreign currencies. The banking sector has undergone significant restructuring, but private
