Helsinki - Nordic nations on Monday promised to review cash-
strapped Iceland's need for additional loans, and were to form a
working group that would monitor Reykjavik's efforts to revive its
economy.
Swedish Prime Minister Fredrik Reinfeldt, current chair of the
Nordic Council, said the Nordic group welcomed the deal Iceland
signed on Friday with the International Monetary Fund (IMF) for a
2.1-billion-dollar emergency loan from the IMF to help stabilize
Iceland's economy.
Reinfeldt told a news conference that the Nordic IMF members would
support the deal when the IMF board was to meet to give formal
approval.
Regarding loans to Iceland, the premiers had not agreed on
specific sums, Reinfeldt said, while Finnish premier Matti Vanhanen
noted that the central banks were independent.
Estimates suggest Iceland needs an additional 4 billion dollars in
loans.
Iceland's Prime Minister Geir Haarde said he was 'grateful' for
the expression of support, adding 'we respect the division of labour
between governments and the central banks.'
The joint statement welcomed Iceland's commitment to reform its
economy and called for improved 'early warning'-systems to avert
similar crises.
Prior to the meeting, Haarde told reporters that economic output
in Iceland was estimated to drop some 10 per cent next year.
The global financial crisis was one of the main topics at the
meeting of the Nordic Council organization that groups Denmark,
Finland, Iceland, Norway and Sweden as well as three self-ruling
territories including Greenland.
Haarde said many of Iceland's 320,000 inhabitants will be hit by
the crisis that has seen the collapse of its three largest commercial
banks.
It will be 'painful,' he said, stating that some will lose their
jobs, others will lose their savings, and that the crisis will set
Iceland back some five years.
The deal with the IMF, that needs approval by the IMF board, was
the first by a Western country since the mid-1970s when Britain
signed a similar deal.
Haarde said a possible deal with the Nordics would not rule out a
possible deal with Russia, referring to recent talks held in Moscow.
The central banks of Denmark, Norway and Sweden in May signed a
swap facility arrangement with the Icelandic central bank which
recently drew 400 million euros (543 million dollars) from Denmark
and Norway.
The financial unrest has fuelled support in Iceland for joining
the European Union, according to a poll commissioned by the
Frettabladid newspaper.
The weekend poll of some 800 people suggested more than two in
three supported an EU application, up from one in two in February.
Haarde, whose Independence Party has opposed joining the bloc,
said discussions about membership would have to await the resolution
of the crisis.
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