Policy Commentary

Ögmundur Jónasson: The Icelandic experience

From June 16-17 2015, ACFO hosted the international Funding Democracy summit, an international two-day event uniting global leaders from industry, government, education and NGOs to address issues of taxation, corruption and trade, and to establish solutions for these global problems. The following is a recap of a Funding Democracy session.

Ögmundur Jónasson opens Funding Democracy summit with lessons from the Icelandic economic crisis and recovery

Icelandic Parliamentarian Ögmundur Jónasson opened the Funding Democracy summit on Tuesday by bringing his personal perspective from Iceland’s financial crisis and recovery. Jónasson gave a brief history of Iceland before diving in to what is understood as one of the worst financial crises in the world, and following that up with Iceland’s steps to recovery and the long term benefits of their solutions.

In 2008, Jónasson explained, Iceland’s financial system collapsed. A shifting landscape toward outsourcing and marketization as well as the complete privatization of banks left a swollen system. Previously Iceland experienced a thriving economy with times of nearly full employment, but the crisis presented a much different picture.

Jónasson went on to outline the key measures and policies that allowed Iceland to recover quickly, while driving home a focus on the people and community. Jónasson detailed the express actions of the government to enact laws that would slow down massive bankruptcy, business closure and home seizure rates — something he credits as key to the speedy recovery.

Other key policies included preventing the socialization of private banks, shielding the real economy and setting goals to balance the budget. These goals amassed to a total of 31.6 per cent of the budget cut. Jónasson noted that the key goal was to protect jobs in welfare services like hospitals and education — a bottom-up approach that went against advice from the IMF.

He recalled widespread acceptance for the cuts. Everyone knew it needed to be done, Jónasson noted, but reorganization was the key. Long term benefits of these actions included:

  • strengthened infrastructure and culture
  • freedom to focus on social issues
  • discussions around democratization

In his final statement, Jónasson reminded the room that in order to steer toward calmer waters, we all need to take an oar – but it only works if we’re in the same boat.

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