According to Politiken, economic analyst Carsten Valgreen has had the good taste to compare Iceland with Zimbabwe. That both countries are in a bit of a mess should be obvious, but even if Iceland may have mismanaged its financial sector during the last decade, there still is some distance between Iceland and Zimbabwe.
Just for starters, Transparency International lists Iceland as the 7th least corrupt country in the world. Zimbabwe is ranked as 166. Having a functioning and reliable state helps in the current mess.
The IMF had this to say about Zimbabwe:
On Zimbabwe, we have been of course watching as others and hoping for a solution that helps Zimbabwe to get beyond the significant crisis it has been in these many years and to make it possible for the international community to help Zimbabwe begin what will be a long-term effort at reform. The Zimbabweans are still in the process of trying to sort out their government, and we certainly have been preparing to help them. We are ready when they are, to begin the effort to try to clear Zimbabwe’s significant external arrears, to make it possible for financing to become available for Zimbabwe, to help Zimbabwe deal with the huge hyperinflation that it has, to help put in place a program that helps, start to address that. So we are in a waiting mode, getting ready to help. Zimbabwe is a huge challenge and will be for all of us, the international financial community. In the same way that it took creativity to find financing for Liberia’s debt relief, for example, it will take a lot of creativity to deal with the challenge of Zimbabwe, but we are ready, and we are waiting.
In July, the IMF was not happy about the state of Iceland:
The economy experienced an extraordinary foreign-funded boom in recent years, with output rising by over 25 percent during 2003-2007. This rapid expansion, however, left a legacy of large macroeconomic imbalances, overstretched private sector balance sheets, and high dependence on foreign financing. The financial sector assets expanded to over 1,000 percent of GDP, while gross external indebtedness reached 550 percent of GDP at end-2007, largely on account of the banking sector.
But still, the Fund tried to be positive about Iceland authorities’ initiatives. Who in their right minds would have anything even remotely positive to say about Robert Mugave?