Readers like you keep news free for everyone.

More than 5,000 readers have already pitched in to keep free access to The Journal.

For the price of one cup of coffee each week you can help keep paywalls away.

Support us today
Not now
Dublin: 14°C Friday 19 August 2022
Advertisement

Iceland to write €24,000 off every household mortgage

Despite international opposition, the Reykjavik government will press ahead with the debt relief plan.

The Blue Lagoon, Grindavik, Iceland
The Blue Lagoon, Grindavik, Iceland
Image: Chris Ford via Flickr/Creative Commons

THE ICELANDIC GOVERNMENT has announced that it will write off household mortgage debt in order to kickstart the economy.

Under the plan, every household in the country will have €24,000 worth of debt written off.

The move was part of the election manifesto of the Progressive Party, led by Prime Minister Sigmundur David Gunnlaugsson.

The idea will cost the country €1.2 billion and will begin in mid-2014. Iceland has been burdened with debt since the 2008 financial crisis, which saw the krona collapse.

A government statement said that the plan would kick-start consumer spending.

“Currently, household debt is equivalent to 108 per cent of GDP, which is high by international comparison.

Making a difference

A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article.

Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation.

For the price of one cup of coffee each week you can make sure we can keep reliable, meaningful news open to everyone regardless of their ability to pay.

“The action will boost household disposable income and encourage savings.”

The plan has been criticised by the IMF, the OECD and various economists, with the IMF saying that the country has “little fiscal space” for the move, while the OECD says the plan should be limited to low income housing.

The measure has improved the country’s rating with Standard & Poor’s, who upgraded the economic outlook from negative to stable.

Read: The leader of Iceland’s ‘Kitchenware Revolution’ reckons we have a thing or two to learn about protests

Read: Iceland PM hits back in mackerel fishing row

Read next:

COMMENTS (96)