Minister of Industry: Iceland Close to Accepting IMF Loan Skip to content

Minister of Industry: Iceland Close to Accepting IMF Loan

Iceland’s Minister of Industry Össur Skarphédinsson told Bloomberg news service yesterday that Icelandic authorities were “very close” to completing an agreement on a loan from the International Monetary Fund (IMF).

According to Morgunbladid, the IMF will lead a team of nations willing to grant a loan to the Icelandic state. The amount of that combined loan will almost be sufficient to solve the entire economic problems Iceland is facing.

The IMF is believed to have relaxed the demands and terms that usually come with a loan of this kind.

“It is not a traditional loan. It is the only loan available to Iceland at the moment,” said Ólafur Ísleifsson, a lecturer at Reykjavík University who used to have a seat on the executive board of the IMF.

Ísleifsson said he expected the loan to be granted for three to five years. He estimates that an IMF loan for three years with a four percent interest rate would mean an interest cost of ISK 27 billion (USD 240 million, EUR 178 million) per year for the Icelandic state.

Japanese authorities have put special emphasis on assisting Iceland through the IMF. It is in their interests to get capital into circulation as they are also concerned that the collapse of the Icelandic economy will have a chain reaction on economies around the world.

Click here to read about the speculations of the Financial Times on a potential IMF-led “rescue packet” for Iceland.

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