Reykjavik/Washington - Iceland has reached an agreement with
the International Monetary Fund (IMF) for a 2.1-billion-dollar
emergency loan to help stabilize the country's economy, the two sides
announced Friday.
An IMF team agreed to the loan during a visit to Iceland. The
Washington-based crisis lender's executive board still has to approve
the deal and could do so in early November, the IMF said. If
approved, Reykjavik could immediately draw on 833 million dollars
under the two-year arrangement.
'This programme will enable us to secure funding and gain access
to the necessary technical expertise required to stabilize the
Icelandic krona and to provide support for the development of a
healthier financial system,' Prime Minister Geir Haarde said.
Under the terms of the agreement, Iceland was to 'commit to a
sustainable long-term economic policy, and a plan for the recovery of
the Icelandic economy,' Haarde said.
The economy of the North Atlantic nation of some 300,000 people
has come under severe strain amid the global credit crunch and has
been forced to nationalize parts of its banking sector.
An agreement with the IMF will likely pave the way for loans from
other sources. IMF Managing Director Dominique Strauss-Kahn said
Iceland's rescue plan deserved international support.
'Iceland has put together an ambitious economic program ... to
help the country achieve medium-term fiscal consolidation following
the collapse of its banking system,' Strauss-Kahn said in a
statement.
Foreign Minister Ingibjorg Solrun Gisladottir said the pending IMF
agreement 'will provide the necessary impetus for some of our friends
and allies in the international system to contribute to the
reconstruction of the Icelandic financial system.'
Earlier this week, reports suggested loans could also be
forthcoming from Japan, as well as from Iceland's Nordic neighbours.
Haarde said the agreement with the IMF was not tied to a
settlement with the British government over British savers' deposits
in a collapsed Icelandic internet bank.
London and Reykjavik have been at odds over the repayment of the
deposits.
Iceland on Thursday received a delegation from neighbouring
Norway. On Friday, Norwegian Foreign Minister Jonas Gahr Store said
he was to visit Iceland next month.
The central bank of Iceland recently drew 400 million euros (543
million dollars) from the central banks of Denmark and Norway. This
was in accordance with a May agreement it made with the central banks
of Sweden, Norway and Denmark.
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