THE GOVERNMENT of ICELAND announced it will write off mortgage debt to the tune of €24,000 in order to kick start the economy. Every household in the country will have €24,000 worth of debt written off.
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.
Household debt is equivalent to 108 per cent of GDP, which is high by international comparison.
“The action will boost household disposable income and encourage savings.”
This move has improved the country’s rating with Standard & Poor’s, who upgraded the economic outlook from negative to stable.