Moody’s Ratings upgrades Iceland to A1, changes outlook to stable

Moody’s Ratings (Moody’s) has upgraded the Icelandic government’s long-term local and foreign currency ratings from A2 to A1 and changed the outlook from positive to stable.

The main driver for the upgrade is the government’s improving fiscal performance. Moody’s expects this improvement to continue, with a significant reduction in the budget deficit and a clearly established downward trend in the government debt-to-GDP ratio since a recent peak in 2020. Moody’s expects the budget deficit to decline broadly in line with the government’s medium-term plans, which the rating agency considers credible.