The net expenses that the Icelandic state has to cover because of deposits of Icelandic banks in foreign countries will amount to approximately ISK 245 billion (USD 1.8 billion, EUR 1.4 billion) according to a preliminary estimate by the International Monetary Fund (IMF).
While Prime Minister Geir H. Haarde and former majority owner of Landsbanki Björgólfur Gudmundsson have stated that the assets of the banks are likely to cover the deposits, the IMF does not appear to share their estimates. The IMF calculates that the assets of the Icelandic banks abroad will only cover about half of claims made by foreign states because of insured deposits, Fréttabladid reports.
According to IMF’s estimates, the gross expenses of the Icelandic state because of the deposits will amount to 47 percent of this year’s gross domestic produce (GDP). Assuming that the bank’s assets suffice for roughly half, around 19 percent will be the responsibility of Icelandic tax payers.
Iceland’s GDP in 2007 was more than ISK 1,293 billion (USD 9.2 billion, EUR 7.1 billion) according to numbers from Statistics Iceland.
Although it is unclear what this year’s GDP will be, the IMF expects Icelandic tax payers to be responsible for paying ISK 245 billion for foreign deposits, most of which are deposits in Landsbanki’s Icesave. However, Glitnir and Kaupthing banks also had deposits abroad.
That means that every Icelandic resident will be indebted by ISK 800,000 (USD 5,700, EUR 4,400) because of these deposits alone. To put these amounts in perspective, Fréttabladid states that ISK 245 billion would suffice to cover the operations of Iceland’s entire healthcare system for two years.
The newspaper was unable to receive comments from the resolution committees of the banks and Minister of Commerce and Banking Björgvin G. Sigurdsson.
Click here to read more about Icesave.