OECD's annual review of Iceland's economy. The first chapter reviews recent developments in the economy and presents projections for the next two years. Chapter II reviews the principal features of macroeconomic policies and their outcomes. Chapter III examines some of the remaining structural problems confronting the nation: the continued deterioration in the fisheries and the lack of success in diversifying the economy; the steady dwindling in aggregate saving and investment; the mounting burden of foreign indebtedness; and the challenges and opportunities offered by the European Economic Area Agreement. Chapter IV discusses Iceland's health care system, an area of increasing concern in most Member countries in recent years, as well as other aspects of the social security system that appear to call for reform. Conclusions are presented in Chapter V.