Iceland and the International Monetary Fund set at positive 2-3 percent by 2010. Additionally Iceland determined that it would not support the losses of its pension funds and social service programmes in order not to take up additional obligations. One of the primary objectives of the Icelandic government in seeking an IMF programme was to stabilize the ISK and to set a path for its gradual appreciation. To stabilize short term pressures on the ISK the Central Bank of Iceland raised interest rates to 18% and prepared to back the krona with its foreign reserves, specifically for which Iceland asked for an IMF programme . The
Politics of Iceland Politics of Iceland The politics of Iceland take place in the framework of a parliamentary representative democratic republic, whereby the President is the head of state, while the Prime Minister of Iceland serves as the head of government in a multi-party system. Executive power is exercised by the government. Legislative power is vested in both the government and the parliament, the Althingi. The judiciary is independent of the executive and the legislature. Iceland is arguably the world's oldest assembly democracy. The Economist Intelligence Unit has rated Iceland as "full democracy" in 2016. Elected to a four-year term, the President has