The plan to get an entire country out of debtors’ prison.

Iceland’s three major banks also got sucked into this game, rolling in easy money they then lent to enterprising Icelandic entrepreneurs. These “business Vikings”—as they are known locally—were also encouraged by soaring stock prices on the Reykjavik exchange to expand their businesses abroad. At its peak, the Reykjavik market’s capitalization rose to more than 250 percent of GDP—making it the most highly valued in the world. Today it’s at 16 percent. “We became victims of our own success,” says the president of the exchange, Thordur Fridjonsson.

Few Icelandic businessmen burned out as spectacularly as Jón Ásgeir Jóhannesson, the man behind the Bonus supermarket chain whose pink pig mascot is ubiquitous across Iceland. Through his Baugur investment company, he created an international retailing empire, accumulating stakes in Saks Fifth Avenue (SKS), Britain’s Hamleys toy stores, and even, no joke, a chain of frozen-food stores in Britain called Iceland. But like the banks that helped finance him—Landsbanki and its two primary rivals, Glitnir (now Islandsbanki) and Kaupthing—Baugur went bust earlier this year. Now it’s up to the government, and the majority of its citizens, to avoid a similar fate.

And that’s where the hard work comes in. Fiscally, Iceland needs to revert to its mean: Under the agreement it reached with the IMF, the country must gradually lift capital controls over the next year, tighten up its monetary policy, and return to a current account surplus by 2013. This won’t be an easy task. Iceland is expected to have debt equal to 120 percent of its 14 billion euro GDP and a budget deficit of about 13 percent of output this year. That’s Italian- or Belgian-style economics.

And the political pressures on the central bank to set monetary policy that aims to achieve the goals set by the IMF and other creditors without causing too much pain at home are intense. To wit: When the central bank earlier this month lowered the overnight repurchase lending rate to 12 percent, Bloomberg called it an act that defied the IMF’s prescriptions. But the Icelandic press—echoing calls from labor unions and employers for lower rates—reported that the bank buckled under IMF pressure.

To get the country out of its hole, Iceland’s leaders are broadly focusing on four economic pillars to propel an export-led recovery and bring in hard currency: fisheries, energy-intensive businesses, tourism, and technology. Not everyone, however, is in perfect agreement about the weight of these objectives—and with good reason.

While fishing has been a mainstay since Norse settlers first landed in the ninth century, fleeing the harsh rule of Norwegian King Harald the Fairhaired, it’s not a growth business. There are natural limits to the tons of fish Icelandic trawlers can land. And it will be a long time before Icelandic delicacies like meaty minke whale and hakarl, or fermented shark, make the aisles of Stop & Shop. Fishing is also the industry most opposed to scrapping the krona and joining the European Union, as it would probably be forced to scrap its successful system—whereby fisherman are assigned scientifically determined quotas and then allowed to trade them among themselves. While some argue that Iceland could teach the EU a thing or two about managing fishing, Eggert Benediktsson, who runs HB Grandi, the largest fishing fleet in the country, is convincingly skeptical: “How do we as an entire country on its knees stand a chance to negotiate anything?”