According to The Financial Times, the Icelandic government is poised to announce a USD six billion loan package to rescue the country’s banking sector.
The FT seems to be the only source of this information at the present moment, with even Icelandic language news websites quoting from it.
The IMF (International Monetary Fund) is reported to be contributing a billion, and the rest from the central banks of the other Nordic countries and Japan. It is not yet known whether Russia is involved in the deal.
The participation of the IMF is seen as a “seal of approval”, without which the other central banks would not get involved.
The IMF imposes conditions upon its lending; but in the case of Iceland, those conditions are reported to be light – especially in comparison to South Korea in 1997.
Iceland will have to restructure its banks and review banking regulation. An in-depth investigation into what triggered the banking crisis is also sought.
The IMF is, however, not insisting that Iceland’s biggest mortgage lender be privatised. The Housing Finance Fund has always been a public body.
There is also not reported to be a deadline for the denationalisation of Glitnir, Landsbanki and Kaupthing banks.
The government will have to implement tougher fiscal policy and re-float the Icelandic krona as soon as possible.
The IMF believes that the stability provided by the loan package will allow the currency to stabilise after an initial short period of volatility.
Further details as they emerge.
Let us hope that Iceland will honour the guarantees it inherited when it nationalized the three banks.
Savers in Landsbanki Guernsey have only been paid 30% of deposits at the moment – savers are seeking a statement from Iceland that they will fund the shortfall.
Good call for the IMF to insist on better regulation and transparency…
How about adding that they should get the head of their Central Bank from somewhere more independent (and qualified?) than the governing political parties
$6 billion – wow that’s $20,000 dollars per citizen.
let us hope that German savers will soon be remunirated. They haven’t received one cent yet although the icelandic compensation fund is responsible, in the case of insolvency. Most other nations have some sort of intergovernmental “deal” with Iceland. Only in germany there is just silence.
Paul
The IMF want a investigation to the causes of the crisis, no doubt they will have some recommendations. The UK (£4Billion), Holland and other countries have already lent substantial sums to the Icelandic government so that their depositors can be paid back. On top of the economic problems there is all the interest payments to be paid. Thats not good.
i hope the icelandic government decide to do the decent thing and refund guernsey savers of landsbanki you were quick to take our life savings a . pity your not so quick to refund the losses we have at this time been given back only 30p in the pound this is apalling
I hope LB refund guernsey, IOM and Germany as soon as possible, Icelandic people got ca 65% of there savings back, the rest is lost, we had our savings in moneymarket bonds who were supposed to be absolutely safe, but i guess no one was expecting what happened, i wish you luck but your luck depends on our luck, and i dont feel so lucky at the moment, if we are forced to write off the IMF loan things will be somewhat more complicated
Forgot to add KB in there somewhere :)