Central Bank of Iceland Discusses Icesave Deal Skip to content

Central Bank of Iceland Discusses Icesave Deal

Central Bank of Iceland governor Svein Harald Oeygard and the bank’s legal experts discussed the responsibility of the Icelandic state under the proposed Icesave agreement in a meeting with the Althingi parliament’s budget and economic and tax committees yesterday.

The Central Bank of Iceland. Copyright: Icelandic Photo Agency.

The Central Bank submitted its evaluation of the agreement and the bank’s estimation of its effect on the national debt and Iceland’s entire economy, Morgunbladid reports.

Certain figures mentioned by the bank will remain confidential until after meetings that are scheduled by the committees to take place today or tomorrow.

However, it has been revealed that the Central Bank’s lawyers criticized the proposed Icesave agreement harshly, along with the entire negotiation procedure.

The lawyers believe that if state-owned companies such as the National Power Company (Landsvirkjun) and the Institute of Regional Development (Byggdastofnun) fail to pay loans higher than GBP 10 million (USD 16 million, EUR 12 million) on their maturity date, all foreign loans related to the agreement will be called in.

According to Morgunbladid’s sources, MPs have called for further data and estimates in relation to the Icesave obligations yesterday, along with further information about the debt situation of the state and municipalities.

On June 5, Icelandic, British and Dutch authorities signed an agreement on Iceland’s obligations towards Landsbanki’s Icesave depositors. Iceland will be provided with loans to honor those obligations. The agreement has yet to be approved by parliament.

The Icelandic state’s foreign debts, including Iceland’s obligations relating to the Icesave deposits, now amount to 200 percent of its gross domestic product (GDP), according to Fréttabladid’s sources.

This information was allegedly revealed at yesterday’s meeting between the Central Bank’s representatives and the parliament’s budget and economic and tax committees.

The International Monetary Fund (IMF) announced in November 2008 that Iceland’s debts would amount to 160 percent of the country’s GDP this year. However, it has since become clear that Iceland’s debts are much higher.

Click here to read more about Icesave.

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