Iceland Discusses Rejecting IMF Loans Skip to content

Iceland Discusses Rejecting IMF Loans

It appears as if a cross-political majority is forming in the Icelandic parliament, Althingi, on reconsidering Iceland’s relations with the International Monetary Fund (IMF). Chairman of the Independence Party Bjarni Benediktsson doubts that it is in Iceland’s best interest to accept further loans.

The Althingi parliament. Photo by Páll Stefánsson.

Benediktsson argued that Iceland can regain trust in the international arena with a credible strategy on state finances and moderate debts, thus disagreeing with Prime Minister Jóhanna Sigurdardóttir, who said cooperation with the IMF is vital for Iceland to regain trust. “[We won’t regain trust] by running around and ask for loans,” Benediktsson stated, according to Morgunbladid.

Minister of Finance Steingrímur J. Sigfússon met managing director of the IMF Dominique Strauss-Kahn at the IMF’s general meeting in Istanbul yesterday and said he was satisfied with the meeting, that understanding for Iceland’s cause had increased. But Strauss-Kahn has yet to convince the majority of the IMF board, Sigfússon pointed out.

Minister of Business Affairs Gylfi Magnússon said on RÚV’s news magazine Kastljós yesterday that although he doesn’t recommend rejecting the IMF loan package, he doesn’t want to make any apocalyptic predictions of what would happen should Iceland decide to reconsider the loans. Iceland would probably still be able to receive loans, the minister reasoned, only on worse terms.

Former Minister of Health Ögmundur Jónasson commented, “The IMF should leave the country immediately,” adding, “It doesn’t serve any purpose here.” Jónasson told Morgunbladid that it’s a myth and an illusion that foreign currency reserves, held solely in loans, can strengthen the Icelandic currency.

Click here to read more about Sigfússon’s meetings with IMF member state representatives in Istanbul.

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