IMF finally approves $2.1B loan to Iceland

The International Monetary Fund on Wednesday approved a two-year, $2.1 billion support program for Iceland designed to restore confidence and stabilize the country's shattered economy.

The approval had been held up because of a British-Icelandic dispute over Britons' accounts in failed Icelandic banks.

The IMF agreed last month to lend Iceland $2.1 billion and help the country raise $3.9 billion in loans from other countries.

After the IMF announcement, four Nordic countries agreed to lend Iceland $2.5 billion, Finland's Finance Ministry said. The four countries agreeing to the package were Finland, Sweden, Norway and Denmark.

"We have a joint desire among the Nordics to help Iceland in extremely difficult economic conditions," ministry spokesman Martti Hetemaki told Finnish broadcaster YLE. "The money will be used to stabilize the currency and finance its imports."

Iceland needs the financing to buy imports and support its currency, which has lost around two-thirds of its value since the beginning of the year because of the collapse of its banking system.

Last month, Icelandic Prime Minister Geir Haarde told his Nordic partners in Helsinki that his country needs some $6 billion to recover from the meltdown.

Britain held up the approval with the argument that Iceland first should pay back British citizens' deposits in failed Icelandic banks.

Both the IMF and the European Union, of which Iceland is not a member, told Reykjavik that they would not give loans to Iceland until the dispute was settled. On Sunday, Icelandic Prime Minister Geir Haarde agreed to guarantee the money.

Iceland earlier had said depositors would get up to 21,000 euros ($26,600). While Iceland is not part of the EU, its membership in the European Economic Area allows the country to participate in a free economic zone along with European Union member states.

Back To Top

	Nordic countries to lend Iceland $2.5 billion	Associated Press	Thu Nov 20	0
	Iceland to get €4 billion bail-out	Norden - the Top of Europe: The Nordic Monthly Rev	Wed Nov 19	0