Poland Agrees to Lend ISK 25 Billion to Iceland Skip to content

Poland Agrees to Lend ISK 25 Billion to Iceland

By Iceland Review

Iceland and Poland signed a loan agreement of PLN 630 million to Iceland (ISK 25 billion at the current exchange rate—USD 198 million, EUR 125 million) yesterday. The loan is for a period of 12 years and has two percent interest throughout 2015 and 1.3 percent after that.

Copyright: Icelandic Photo Agency.

“It is very important to have landed this agreement,” Iceland’s Minister of Finance Steingrímur J. Sigfússon told Morgunbladid. He is currently with an Icelandic delegation in Istanbul where the general meeting of the International Monetary Fund (IMF) is taking place.

“It is especially pleasing to be able to deal with Poland this way,” Sigfússon commented. “They are so positive and helpful and emphasized that they want to contribute. This is in many ways a new position for Poles, who have gone through extensive difficulties in the past decades and accepted financial aid. Now they’re at the other end of the table.”

The Polish loan will be paid out in three parts but not until the IMF has reviewed its economic stabilization program for Iceland.

The review, which has been postponed many times, will not take place until a solution to the Icesave dispute has been found and so the payment of the Polish loan also depends on Icesave’s conclusion.

The same applies to other loans that have been promised to Iceland, except the loan from the Faroe Islands. Only the first part of the IMF loan package has been paid out and the second depends on Icesave, including the loans from the Nordic countries.

The first part amounted to USD 850 million (EUR 534 million) and Iceland has been promised a total of USD 2.1 billion (EUR 1.4 billion). The second payment was supposed to arrive in February 2009.

“We don’t like it when the International Monetary Fund and the European Union are operating in the interest of British and Dutch authorities and are forcing us to pay more than what we are obliged to do,” said former Minister of Health Ögmundur Jónasson in an interview with the BBC on Friday, according to Morgunbladid.

In response to the possible giant loan from Norway mentioned by the Progressive Party last week, Sigfússon said, “I think this matter is in an absolute idea stage for some individuals in Norwegian politics and it isn’t timely to discuss that as breaking news.”

Sigfússon also met with Russian Deputy Finance Minister Dmitri Pankin to discuss a possible loan to Iceland. “It was a good meeting in a friendly atmosphere,” Sigfússon described, without revealing anything about the outcome of the meeting.

However, as the Russian news agency RIA Novosti reported yesterday, Russian Finance Minister Alexei Kudrin said the Icelandic and Russian delegations had not made a loan agreement.

A meeting was also supposed to take place between the Icelandic, British and Dutch delegations in Istanbul in an effort to find a joint solution to the Icesave dispute but no such meeting has been scheduled.

However, Sigfússon did discuss Icesave in an informal meeting with British Chancellor of the Exchequer Alistair Darling. “We confirmed a joint interest in continuing with finding solutions,” Sigfússon said.

The Icelandic delegation will continue its meetings in Istanbul. Sigfússon is planning to meet Dutch Minister of Finance Wouter Bos to discuss the Icesave dispute today.

Tomorrow Sigfússon will meet with managing director of the IMF Dominique Strauss-Kahn and a meeting with the Portuguese delegation is also scheduled. Meetings with the Russian delegation are also expected to continue.

Click here to read more about Icesave.

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