31 Dec 2011

IMF / ICELAND ECONOMIC RECOVERY

As the first country to experience the full force of the global economic crisis, Iceland is now held up as an example by some of how to overcome deep economic dislocation without undoing the social fabric. IMF

Posted at: December 31, 2011 12:01 am

Duration: 05:45

Available in: SD

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Full script

STORY: IMF / ICELAND ECONOMIC RECOVERY
TRT: 5.45
SOURCE: IMF
RESTRICTIONS: NONE
LANGUAGE: ENGLISH / NATS

DATELINE: 25 – 28 OCTOBER 2011, REYKJAVIK, ICELAND

SHOTLIST:

1.	Pan right, city view 
2.	Wide shot, city view
3.	Wide shot, river in Rekjavik
4.	Various shots, banks
5.	VOX POP (English) Young Woman:
"Everybody was just spending money like crazy"
6.	Med shot, women window shopping
7.	VOX POP (English) Older Woman:
"Everybody was buying, buying something."
8.	Close up, pair of boots in shop window
9.	VOX POP (English) Mother with Children:
"I think that people acted stupid and some didn't want to take any responsibility."
10.	Med shot, car driving along lane
11.	Wide shot, high-rise building
12.	SOUNDBITE (English) Simon Johnson, Professor at MIT:
"Iceland was in very bad shape when they turned to the IMF for help. They were overwhelmed really by the size of the banking disaster. And under those very difficult circumstances they made some brave and, I think, ultimately sensible decisions."
13.	SOUNDBITE (English) Paul Krugman, NYT Columnist and Professor at Princeton University:
"Basically Iceland, almost by luck, by the sheer extremity of its situation, was forced into doing a much more nuanced policy than these harsh, you know, austerity, and somehow confidence will save all that was followed elsewhere."
14.	SOUNDBITE (English) Julie Kozack, Mission Chief for Iceland, IMF:
"We learned several lessons from working with Iceland. First is that the use of unconventional measures, like capital controls, is appropriate in some circumstances and that we shouldn't shy away from using these measures if they're needed. "
15.	SOUNDBITE (English) Paul Krugman, NYT Columnist and Professor at Princeton University:
"This time the Fund was flexible, was willing to embrace, you know, temporary capital controls which were regarded as heresy 12 years ago. It's been willing to accept a program that protects the social safety net. It did not try to remake the society the way it did. So the Fund is actually, from my sort of position, the Fund had become a good guy in the system."
16.	Wide shot, Landsbankinn entrance
17.	Close up, currency exchange board 
18.	Various shots, people shopping in supermarket
19.	SOUNDBITE: (English) Gylfi Arnbjörnsson, President of Icelandic Confederation of Trade Unions:
"The IMF has been sort of transforming their policy, taking more notice of the welfare system and taking more notice of the need to have a just transition in periods like this."
20.	SOUNDBITE: (English) Simon Johnson, Professor at MIT:
"In terms of fiscal austerity, there'd obviously been a shift in IMF thinking since the Asian crisis in the late 1990s."
21.	SOUNDBITE: (English) Steingrímur Sigfússon, Minister of Finance of Iceland:
"We were left ample room to choose the mix of measures on the fiscal side, to what extent we would earn revenue on the expenditures side, to what extent we would cut expenditures and in what sectors, and so forth. That enabled us to find the best mixture that we thought would bring the society forward."
22.	Pan right, homes in Reykjavik
23.	Med shot, Iceland flag
24.	Wide shot, boat harbor
25.	VOX POP (English) Young Man:
"After the crisis there would be opportunities for me to start working because then companies will need people to work."
26.	VOX POP (English) Young Woman with Family:
"I think its getting better. I am not worried."
27.	SOUNDBITE: (English) Jón Daníelsson, Reader in Finance, London School of Economics:
"The main success in Iceland has been to avert a sovereign default. The fact that the country now is able to go to international capital markets, borrow at rates that are more favorable than Spain, signals the Government has had quite a success."
28.	Wide shot, statue in public square
29.	Wide shot, historic building
30.	Close up, building detail
31.	SOUNDBITE: (English) Steingrímur Sigfússon, Minister of Finance of Iceland:
"This was our re-entrance to the international capital markets, first successful attempt for five years or so. So it was a milestone for Iceland as well as successfully completing the program at the end of August. These are two of the big achievements this year."
32.	Wide shot, city view
33.	Wide shot, tanker on river
34.	VOX POP (English) Young Woman:
"I think I'll go away, probably. And most people my age want to go away, because they know they do not want to be here."
35.	VOX POP (English) Young Man with Child:
"It might have diminished the chance of me actually wanting to live in Iceland in the future."
36.	SOUNDBITE: (English) Gylfi Arnbjörnsson, President of Icelandic Confederation of Trade Unions:
"We know also the brain drain that we are suffering because these are those that have higher education, both skilled workers by the magnitude, and university or academic educations.  They are leaving. Now that's, of course, frightening because how are we going to sustain the growth of our export industries if we do not have the manpower to meet the challenges?"
37.	SOUNDBITE: (English) Kristín Ingólfsdóttir, Rector, University of Iceland:
"These are people that have qualifications that are sought after elsewhere, and if we're not able to have an environment that attracts these people, then we're in a lot of trouble."
38.	SOUNDBITE: (English) Steingrímur Sigfússon, Minister of Finance of Iceland:
"We need to facilitate investments and create jobs."
39.	SOUNDBITE: (English) Gylfi Arnbjörnsson, President of Icelandic Confederation of Trade Unions:
"I think actually Iceland could be the country, the first country in the world that would on a large scale be relying on sort of a green economy."
40.	SOUNDBITE: (English) Finnur Oddson, Managing Director, Iceland Chamber of Commerce:
"We have excellent resources in abundance. We have very good people and we have a pretty competitive infrastructure, so there is going to be growth given the right conditions."
41.	SOUNDBITE: (English) Simon Johnson
"The human capital here is second to nowhere. And I'm sure they can build a prosperous, productive, modern economy on that basis."
42.	SOUNDBITE: (English) Steingrímur Sigfússon, Minister of Finance of Iceland:
"Iceland is doing amazingly well considering, but that does not change the fact that internally we as a society have a lot of work to do."

STORYLINE:

As policymakers continue to grapple with the problems facing the crisis-hit countries in the euro area and the clouded outlook for the global economy, attention has turned to Iceland, which three years ago and saw its entire banking system crumble in just a few days.

VOX POP (English) Young Woman:
"Everybody was just spending money like crazy"

VOX POP (English) Older Woman:
"Everybody was buying, buying something."

VOX POP (English) Mother with Children:
"I think that people acted stupid and some didn't want to take any responsibility."

Iceland was the first advanced economy to experience the full force of the 2008 global financial crisis, and the first to subsequently seek financial support from the IMF.

SOUNDBITE (English) Simon Johnson, Professor at MIT:
"Iceland was in very bad shape when they turned to the IMF for help. They were overwhelmed really by the size of the banking disaster. And under those very difficult circumstances they made some brave and, I think, ultimately sensible decisions."

SOUNDBITE (English) Paul Krugman, NYT Columnist and Professor at Princeton University:
"Basically Iceland, almost by luck, by the sheer extremity of its situation, was forced into doing a much more nuanced policy than these harsh, you know, austerity, and somehow confidence will save all that was followed elsewhere."

SOUNDBITE (English) Julie Kozack, Mission Chief for Iceland, IMF:
"We learned several lessons from working with Iceland. First is that the use of unconventional measures, like capital controls, is appropriate in some circumstances and that we shouldn't shy away from using these measures if they're needed. "

SOUNDBITE (English) Paul Krugman, NYT Columnist and Professor at Princeton University:
"This time the Fund was flexible, was willing to embrace, you know, temporary capital controls which were regarded as heresy 12 years ago. It's been willing to accept a program that protects the social safety net. It did not try to remake the society the way it did. So the Fund is actually, from my sort of position, the Fund had become a good guy in the system."

Just as Iceland's financial crisis stands out in terms of its sheer scale, so does its unconventional path to recovery. Key to this recovery has been an IMF-supported program worth $2.1 billion that ended in August this year.

SOUNDBITE: (English) Gylfi Arnbjörnsson, President of Icelandic Confederation of Trade Unions:
"The IMF has been sort of transforming their policy, taking more notice of the welfare system and taking more notice of the need to have a just transition in periods like this."

SOUNDBITE: (English) Simon Johnson, Professor at MIT:
"In terms of fiscal austerity, there'd obviously been a shift in IMF thinking since the Asian crisis in the late 1990s."

SOUNDBITE: (English) Steingrímur Sigfússon, Minister of Finance of Iceland:
"We were left ample room to choose the mix of measures on the fiscal side, to what extent we would earn revenue on the expenditures side, to what extent we would cut expenditures and in what sectors, and so forth. That enabled us to find the best mixture that we thought would bring the society

Private creditors ended up shouldering most of the losses relating to the failed banks, and today Iceland is experiencing a moderate recovery. Unemployment is declining, confidence is returning, and the government was able to return to the capital markets earlier this year.

VOX POP (English) Young Man:
"After the crisis there would be opportunities for me to start working because then companies will need people to work."

VOX POP (English) Young Woman with Family:
"I think its getting better. I am not worried."

SOUNDBITE: (English) Jón Daníelsson, Reader in Finance, London School of Economics:
"The main success in Iceland has been to avert a sovereign default. The fact that the country now is able to go to international capital markets, borrow at rates that are more favorable than Spain, signals the Government has had quite a success."

SOUNDBITE: (English) Steingrímur Sigfússon, Minister of Finance of Iceland:
"This was our re-entrance to the international capital markets, first successful attempt for five years or so. So it was a milestone for Iceland as well as successfully completing the program at the end of August. These are two of the big achievements this year."

Iceland is not out of the woods yet, and additional efforts are needed to reduce unemployment and boost growth.

VOX POP (English) Young Woman:
"I think I'll go away, probably. And most people my age want to go away, because they know they are not want to be here.

VOX POP (English) Young Man with Child:
"It might have diminished the chance of me actually wanting to live in Iceland in the future."

SOUNDBITE: (English) Gylfi Arnbjörnsson, President of Icelandic Confederation of Trade Unions:
"We know also the brain drain that we are suffering because these are those that have higher education, both skilled workers by the magnitude, and university or academic educations.  They are leaving. Now that's, of course, frightening because how are we going to sustain the growth of our export industries if we do not have the manpower to meet the challenges?"

SOUNDBITE: (English) Kristín Ingólfsdóttir, Rector, University of Iceland:
"These are people that have qualifications that are sought after elsewhere, and if we're not able to have an environment that attracts these people, then we're in a lot of trouble."

SOUNDBITE: (English) Steingrímur Sigfússon, Minister of Finance of Iceland:
"We need to facilitate investments and create jobs."

SOUNDBITE: (English) Gylfi Arnbjörnsson, President of Icelandic Confederation of Trade Unions:
"I think actually Iceland could be the country, the first country in the world that would on a large scale be relying on sort of a green economy."

SOUNDBITE: (English) Finnur Oddson, Managing Director, Iceland Chamber of Commerce:
"We have excellent resources in abundance. We have very good people and we have a pretty competitive infrastructure, so there is going to be growth given the right conditions."

SOUNDBITE: (English) Simon Johnson
"The human capital here is second to nowhere. And I'm sure they can build a prosperous, productive, modern economy on that basis."

SOUNDBITE: (English) Steingrímur Sigfússon, Minister of Finance of Iceland:
"Iceland is doing amazingly well considering, but that does not change the fact that internally we as a society have a lot of work to do."