Iceland is responding to the crisis in an unprecedented way: canceling mortgages to taxpayers who have paid too much as a result of the default, by making the banks pay the bill, which caused that default. In fact, a plan has been introduced for the reduction of inflation-related mortgages by 150 billion crowns, equal to about 900 million euros, to speed up the recovery of the nation, which collapsed in 2008.
A promise that the Progressive Party, leader of the centre-right coalition, had made during the electoral campaign and which it is now preparing to keep. A repayment interpreted as compensation after the devaluation of the crown had caused prices and mortgage payments to skyrocket.
The money will be paid by finance and hedge funds: the Reykjavik government has in fact announced a squeeze on banks and a lightening of the portfolios of many speculative funds, with the cutting of old foreign debts inherited from the crisis. A move that while on the one hand made the citizens of the island close to the Arctic Circle rejoice, on the other hand provoked strong dissent from both the International Monetary Fund and Standard & Poor's.
According to the Washington institute, the economic recovery in Iceland is still weak and it is not possible to give anything to taxpayers, while the rating agency has threatened to lower the rating of the country. Despite this, Prime Minister Sigmind Gunnlaugsson said that the real economic renaissance of the island has begun, after the fall of 2008. For Gunnlaugsson, the impact on the accounts in the next three years will be minimal.
In addition to easing mortgages, the Executive has also launched a plan that provides tax breaks to encourage Icelanders to use their pension funds to eliminate debt.
