Úr ræðu Geirs H(álfvita) Haarde á ársfundi seðlabankans í vor

28.3.2008

Geir H. Haarde, forsætisráðherra, flutti í dag ræðu á ársfundi Seðlabanka Íslands. Þar sagði hann meðal annars:

„Allt bendir til að lokið sé að sinni mikilli uppsveiflu í íslensku efnahagslífi. ...Gangi spár eftir mun því augljóslega slá verulega á þenslu í efnahagslífinu og hagkerfið leita jafnvægis á ný eftir ár mikillar uppbyggingar... Hins vegar gerir það stöðuna flóknari að nú fara saman þær fyrirséðu innlendu aðstæður, sem ég hef lýst, og þær óvæntu breytingar á erlendum fjármálamörkuðum, sem enginn gat séð fyrir og við höfum ekki á okkar valdi.“

„Þegar horft er á staðreyndir í efnahagslífi okkar kemur í ljós að öllum hagtölum og hagspám ber í meginatriðum saman um að horfurnar séu góðar, staða efnahagsmála sé í meginatriðum sterk og staða bankanna traust. Þetta hefur verið rækilega staðfest af þekktum erlendum fræðimönnum...“

„Mikill hagvöxtur síðustu ár hér á landi ásamt velheppnaðri einkavæðingu hefur skilað sér í góðri afkomu ríkissjóðs sem meðal annars hefur verið nýtt til að greiða niður skuldir. Hreinar skuldir ríkissjóðs eru nú litlar sem engar og geta fá vestræn ríki státað af slíkri stöðu. Það þýðir að ríkissjóður hefur mikinn fjárhagslegan styrk og getur tekið að láni verulegar fjárhæðir ef á þarf að halda. Það er því engum vafa undirorpið að ríkissjóður og Seðlabankinn gætu hlaupið undir bagga ef upp kæmi alvarleg staða í bankakerfinu. Ég hef ítrekað verið spurður um þetta af erlendum aðilum á liðnum vikum og hef ávallt svarað því til að íslensk stjórnvöld muni við slíkar aðstæður hiklaust grípa til sömu aðgerða og ábyrg stjórnvöld annars staðar. Þetta vil ég árétta nú.“

Lokaorð forsætisráðherra voru:

„Íslenskt bankakerfi og íslensk efnahagsmál standa traustum fótum þótt á móti blási um þessar mundir. Kerfisbundið afnám ýmiss konar hafta í efnahagsstarfseminni á síðustu fimmtán árum eða svo, einkavæðing, markvissar skattalækkanir og alþjóðavæðing íslensks atvinnulífs hafa þegar skilað stórfelldum ávinningi og lagt grunninn að nýju framfaraskeiði á komandi árum. Við munum hiklaust halda áfram á þeirri braut þegar við höfum unnið okkur út úr þeim tímabundnu erfiðleikum sem nú steðja að.“

Athugasemdir

[Baldur Fjölnisson, 23.10.2008 kl. 16:17]

Þessi vitleysingur hlýtur að vera á einhvers konar ofskynjunarefnum sem og þeir sem taka mark á honum - sem geta varla verið margir. Hahahahahaha.

[Baldur Fjölnisson, 23.10.2008 kl. 16:19]

Mr. Geir H. Haarde, Prime Minister of Iceland

 

The Icelandic Economy – A Notable Success Story

 

The Icelandic-American Chamber of Commerce

Annual Conference, New York City, March 13, 2008

 

 

Chairman of the Icelandic-American Chamber of Commerce, ladies and gentlemen.

 

For decades, Iceland and the United States have shared a very friendly and reliable relationship. This extends to the political, cultural and, not least, the business scene. Like so many Icelanders, I had the good fortune to study in this country and have fond memories of living both here on the East coast and in the Midwest. Many Icelanders have similar ties to the US and our nations do share some similarities. Both are nations where the individual is respected, entrepreneurism is priced and where each man has the opportunity to shape his or her fortune.

 

So, while Iceland is a European country and prides itself of its Nordic welfare model, American influences are clearly visible, not least in the business community where Anglo-Saxon ideology and approaches seem closer to our way of thinking than those of continental Europe, and even Scandinavia. Perhaps, it is this blend together with our basic characteristics of free, energetic and entrepreneurial spirit that explains why the country has been so successful.

 

The Icelandic-American Chamber of Commerce and its sister organization in Iceland have played an important role in nurturing the business relationship between the two countries. I wish to take this opportunity to thank these two organizations for all their good work over the years.

 

Strong economic fundamentals

Let me now turn to my topic today, the Icelandic economy, its development in the past decade and a half and its immediate prospects. The Icelandic people currently enjoy some of the best standards of living in the world. Furthermore, various international surveys verify that Icelandic businesses operate in one of the most competitive and free business environment in Europe. These two facts are by no means unrelated. The Icelandic people have had the wisdom to realize that a prosperous society invariably rests on the foundation of an energetic and flexible environment for private enterprise and business.

Even though Iceland is geographically an island, it can certainly not be said that an ocean lies between its domestic economy and that of the rest of the world. It is a member of important international economic institutions and is closely watched by the three major international credit rating agencies. In its most recent economic survey of Iceland, in February this year, the OECD states that the Icelandic economy is both resilient and quite flexible. It points out that per-capita income has grown twice as fast as the OECD average since the mid-1990s and that the country had the fifth highest gross domestic product per capita among OECD member countries in 2007.

 

Other internationally recognized measures reveal some of the reasons for this standing. Iceland ranks number one on the Transparency International Index measuring the level of corruption. It ranks seventh on the IMD World Competitiveness Index, fourteenth on the Heritage Foundation Global Economic Freedom Index and is one of the most active economies for new businesses according to the Global Entrepreneurship Monitor. But perhaps the most important index of them all in my mind is the United Nations Human Development Index, which measures life expectancy, literacy, education, standard of living and GDP per capita for countries worldwide. Iceland topped the 2007 list.

 

All these indicators point to a robust economy that supports a thriving population. But there is of course more to the story of the Icelandic economy.

 

Underlying themes of economic policy.

Let me now explore in more detail the underlying themes of the economic policy of successive governments for nearly two decades. They are liberalization, privatization, globalization and tax cuts.

 

Iceland was a founding member of the European Economic Area in the early 1990s, whereby the countries of the European Union and those of the European Free Trade Association, including Iceland, created the world’s largest single market for capital, goods, services and labor. For Iceland, this meant the opening up of the economy and significant liberalization in many areas. Further liberalization has ensued. Making sure that businesses are not stifled by overregulation and bureaucracy is something we consider vital.

 

Privatization of key state-owned enterprises between 1991 and 2005 was a great success allowing thousands of Icelandic citizens to become shareholders. The most important privatizations in terms of revenues for the Treasury and effects on society were long-term lending funds, two commercial banks and Iceland Telecom which was sold to cornerstone investors in 2005 but will be floated on the stock exchange in Iceland next week. The privatizations are not only a revenue generator for the Treasury but a major manifestation of the guiding principle of Iceland´s Governments since 1991 that private enterprise should be entrusted with as many aspects of the economy as can reasonably be expected.

 

Embracing globalization has been the third pillar underlying the progress of the Icelandic economy since the turn of this century. Iceland is a small country which means that businesses have only limited domestic growth opportunities. Therefore, it is only natural for ambitious companies to seek ways to expand overseas. Icelandic investors and entrepreneurs have made their mark on the European business scene and this has had a rippling effect through the Icelandic economy and society as a whole. Naturally, this road leads in both directions. Iceland has also been the recipient of major investment by non-Icelanders in the past few years. The country has vast environmentally-friendly, renewable hydro and geothermal energy resources, which have attracted power-intensive industries. These industries have been instrumental in broadening the export base of the country and have good future prospects.

 

Finally, I mention tax cuts as one of the most important underlying themes of economic policy. In 1995 the combined state and municipal personal income tax stood at 42% and at 47% for the higher income groups. The current uniform rate is 35.7%. Similarly, the corporate income tax has been slashed from 50% in 1991 to the current 18% and last month the Government announced a further cut to 15% as of this year. The taxation of capital gains and other financial income was also both simplified and dramatically lowered to a favorable level of 10%, providing an important incentive to wealth creation as well as having a catalytic impact on the business environment as a whole. There is no doubt that these bold tax cuts have played a vital role in our economic success. Tax revenues have increased substantially due to increased economic activity, more wealth creation, higher profits for businesses and higher incomes.

 

Chairman, ladies and gentlemen.

 

A cooling economy will restore internal and external balances.

I do not intend to dwell too much on statistics. A handout with slides that show the development of the main economic trends has been made available to you.

 

Let me however mention that various international economic institutions and the major credit rating agencies have highlighted the internal and external imbalances in the vibrant Icelandic economy over the past few years. A current account deficit reaching over 25% of GDP in 2006, a vibrant labor market with less than 1% unemployment, an inflation rate that has remained above the Central Bank’s target of 2.5% and high interest rates with the Central Bank’s policy interest rate currently at 13.75%. These imbalances indicate some side effects of the rapid progress of the Icelandic economy.

  

It is true that the last few years have put strains on the economy and it is perfectly understandable that many observers need some additional interpretation. What emerges when these indicators are examined more closely is that many of the symptoms have rather obvious and benign explanations.

 

A large part of the current account deficit can be explained by imports related to the construction of power plants and aluminum smelters, which will generate future export earnings. I would also add that the current build-up of production capacity in the energy sector and power-intensive industries is now more or less completed. This, as well as the cooling-off in the construction sector, will contribute significantly to a slow-down in economic activity expected in 2008 and 2009. This year, economic growth is forecast at about 1%, which is significantly below the long-term average. This slow-down eases conditions in the labor market. Similarly, the inflation rate is expected to reach the Central Bank´s target in the first half of 2009. It can also be noted that a significant part of the price increases can be traced directly to the housing market, which is included in the cost of living index in Iceland, contrary to the practice in most other countries. Finally, the current account deficit should shrink dramatically to below 10% this year and under 7% in 2009. Therefore, I am confident that the imbalances that we have experienced during the past few years will disappear and that we will be faced with a more stable economic environment.

 

Rapid economic growth and proceeds from privatization have boosted public finances. Budget surpluses, amounting to a stunning 3-5% of GDP in the past few years, have been used to reduce public debt, build up assets in the public sector pension funds and lower taxes. It is expected that at the end of this year, net public sector debt will have fallen to about 6% of GDP as compared with close to 40% in the mid-1990s. This is a great achievement and one of the main strengths of the Icelandic economy.

 

Moody’s has rated the country as triple A for some time but decided last week to assign a negative outlook to this rating. The reason is the agency’s recent one-notch downgrade of the financial strength ratings of Iceland’s main commercial banks. Nevertheless, Moody’s applauds the country for its advanced economic structure, low government debt, high per capita incomes and fully-funded pension system, stating that it is a highly creditworthy developed country whose public finances and wealth compare very favorably, even against many of its triple A peers.

 

The overall picture is clear: The economy is highly advanced, wealthy, strong, flexible and has noticable characteristics that should be the envy of many Western countries, namely favourable demographics, a fully-funded pension system which has been a valuable source of capital for expanding Icelandic businesses both domestically and abroad, strong government finances with hardly any government net debt and proven economic flexibility. I would also underline the energetic, free and entrepreneurial spirit that characterizes both the working population and the business community.

 

The Icelandic financial sector.

I now wish to turn to the final topic of my address today, the Icelandic financial sector. One of the most noticeable factors in Iceland’s recent economic development has been the growth of the financial sector, which now accounts for about 10% of GDP compared to 6% in the year 2000. During this time, the industry’s assets have grown to about eight times Iceland’s GDP. Privatization of state-owned banks and mergers among Iceland’s largest banks some years ago as well as sweeping tax cuts released new energy in the sector. The banks have found growth opportunities outside Iceland and transformed themselves from purely local deposit institutions to truly international banks. This has been a welcome development and has added an important pillar to the economy, a pillar that the Government wants to do its utmost to preserve and strengthen even further. The Icelandic Government is fully committed to ensuring that the conditions for a continued success of the financial sector remain favorable.

 

The Icelandic banks have certainly felt the effects of the current turmoil in international financial markets, which has made access to funding more difficult and costly for most international banks. However, the banks remain strong according to the Icelandic Financial Supervisory Authority (FME), which points to their relatively high capital adequacy ratios, good liquidity position, increased proportion of deposits in their funding profile and their ability to withstand severe stress tests that the authority performs regularly. All indications are that the Icelandic banks are healthy and I am confident that they will weather the current storm in international financial markets.

 

It should also be noted that while the Icelandic banks are feeling the effects of the recklessness that characterized sub-prime lending by banks in the United States – they have had very limited exposure to the complex debt instruments that have been unraveling in the past few months. The Icelandic banks have been more restrained and cautious in this regard than many of their peers. A big part of their current predicament, as shown in the high premium placed for insuring their debt, is that the general sentiment in the markets at the moment is adverse towards financial institutions in a little known market. As markets are prone to swinging moods, we would expect that this situation is a temporary one – especially since the underlying fundamentals of the Icelandic banks do not seem to justify the current skepticism towards them.

 

Finally, Mr. Chairman, let me emphasize that I think the transformation of the Icelandic economy in the past 15 years is a major success story and it has been a pleasure to share it with you today. We have laid the foundations for at least another 15 years of prosperity.

[DoctorE (IP-tala skráð) 23.10.2008 kl. 21:01]

Við vissum flest að við stefndum í glötun á þessum tíma..... ríkisstjórnin... welll