Address of Prime Minister Geir.H. Haarde to the Annual Meeting of the Central Bank of Iceland March 28th 2008

In Prime Minister Geir H. Haarde´s address to the Annual Meeting of the Central Bank of Iceland today he stated the following:

“All signs indicate that the substantial expansion in the Icelandic economy is drawing to a close...By current forecasts, the economy is set for a slowdown towards an equilibrium after several years of rapid expansion...On the other hand, the combination of domestic developments described earlier and the unforeseen course of international financial markets that are beyond our powers complicates these future prospects.”

“When we view the facts of the Icelandic economy, all economic figures and forecasts broadly agree that the prospects for the economy are good, that the economy is healthy and the banks sound. This has been well confirmed by foreign experts.”

“The substantial economic growth in recent years along with a successful privatisation has created a healthy Treasury balance that has in part been used to repay debt. The net debt of the Treasury is now quite small or almost nonexistent, a fact that few western nations can boast of. This means that the Treasury is in a strong position and can therefore borrow sizeable amounts if necessary. There is no doubt that the Treasury and the Central Bank could provide assistance if a serious situation were to emerge in the banking system. I have repeatedly been asked about this by foreign parties in recent weeks and I have always responded that the Icelandic authorities would in such circumstances not hesitate to resort to the same measures as responsible authorities in other countries. I am restating this now.”

The Prime Minister´s concluding remarks were:

“The Icelandic banking system and the Icelandic economy are both on strong foundations in spite of the current adversity. The systematic dismantlement of various economic restrictions in the past decade and a half, the series of privatisations, determined tax cuts and the globalisation of the economy have already yielded enormous dividends and paved the way for a new period of progress in coming years. We will not hesitate to continue on this path, once we have emerged from the temporary difficulties we now face.”

Address of Prime Minister Geir.H. Haarde