IMF Prepared to Grant Iceland Loan Skip to content

IMF Prepared to Grant Iceland Loan

Executives of the International Monetary Fund (IMF) have told Icelandic authorities that the fund is prepared to grant Iceland a loan, provided that the disagreements with British and Dutch authorities because of the Icesave deposits subside.

Iceland has reached an agreement on this matter with the Netherlands and an agreement with Britain is underway.

According to Morgunbladid, Iceland’s Prime Minister Geir H. Haarde said during a press conference on Friday that Icelandic authorities would have to look into what the prerequisites and terms for an IMF loan would be. “When that is clear we will decide what to do.”

The IMF has completed a draft on strategies on how to assist states that have suffered severe blows because of the international economic crisis. Managing director of the IMF Dominique Strauss-Kahn declared on Friday that the fund had an amount of USD 200 billion (EUR 147 billion) available for such purposes. A loan could be granted within two weeks.

Strauss-Kahn said the fund was prepared to consider requests for loans from every country in trouble, regardless of whether it was wealthy or impoverished.

Japan’s Prime Minister Taro Aso, proposed during the G7 meeting on Friday that Iceland would receive assistance through the IMF. Shiego Katsu, one of the fund’s managing directors, commented that if Russia wanted to grant Iceland a loan, it should be in cooperation with the IMF.

In an article by Iceland’s Foreign Minister Ingibjörg Sólrún Gísladóttir published in Morgunbladid today, the minister recommends cooperation with the IMF as a short-term solution for Iceland. A long-term solution to Iceland’s economic woes, in her opinion, is joining the European Union, adopting the euro and receiving support from the European Central Bank.

“After the battles fought in World War II, Icelandic politicians were faced with the haunting question of whether Iceland could manage without formal allies in times of war. They decided it could not and joined both the United Nations and NATO,” the minister writes.

“Now we are faced with a comparable question although the threats are of an economic nature,” Gísladóttir reasons in her article, emphasizing that Iceland can turn this crisis into a new beginning for its citizens and companies. The minister is currently recovering from surgery in New York.

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