The International Monetary Fund (IMF) will conduct its fifth review of Iceland's Stand-By arrangement of 2.1 billion U.S. dollars in April, according to a statement issued by the IMF mission to Iceland seen here on Friday.
Headed by Julie Kozack, the IMF mission visited Reykjavik recently to hold discussions for the fifth review of the Stand-By arrangement.
"The Icelandic economy is recovering. In 2011, gross domestic product (GDP) growth is set to turn positive for the first time since the crisis, though there is uncertainty surrounding the prospects for investment and private consumption," the statement said.
Inflation is projected to remain close to the central bank's target. Public and external debts remain on a downward path, supported by the steady implementation of fiscal consolidation measures and projected improvements in the balance of payments, the statement added.
"Financial sector restructuring is moving forward. Savings banks and non-bank financial institutions are being recapitalized, and the supervisory framework is being strengthened by amendments that will be enacted in the coming months," the statement said.
The IMF mission is also positive about recent agreements to restructure the debts of households and small enterprises, saying that will help put households, corporations and banks on a more secure financial footing, which is essential for a sustainable recovery.
"Broad agreement has been reached on policies to deliver program objectives, but the authorities are still in the process of developing their strategy for liberalizing capital controls," the statement said.
"Discussions on the revised strategy will continue in the next few weeks, with the aim of bringing the review to the Fund's Executive Board by April 2011," the IMF statement noted, adding that the main challenge for Iceland is to increase employment./.