PRESS RELEASE FROM THE ICELANDIC PRIME MINISTER’S OFFICE:
The Icelandic Government has reached an agreement ad referendum with a mission from the International Monetary Fund (IMF) on a comprehensive stabilisation programme.
We have reached agreement ad referendum with a mission from the IMF on an economic stabilisation programme that could be supported by a stand-by arrangement with the fund. The mission will now return to Washington to get approval of this programme from the IMF’s management. We are confident that the IMF’s management will support the programme and submit it for approval by the IMF’s executive board as soon as possible. The economic programme will be supported by an SDR 1.4 billion (USD 2 billion) loan under a two-year Stand-By-Arrangement. Iceland would be able to draw SDR 560 million (USD 830 million) immediately after the Board approval. It is also expected that an agreement with the IMF will encourage lending from other sources.
Economic Stabilisation Programme Objectives:
The objectives of our programme are as follows:
1. Restore confidence in the Icelandic economy and stabilise the Icelandic krona through a comprehensive and strong macro-economic programme;
2. Restore fiscal sustainability and prepare a strong medium-term fiscal consolidation programme;
3. Implement a sound banking strategy to re-establish a viable banking system to support the Icelandic economy.
The short term stabilisation of the exchange rate is essential in order to get inflation under control and normalise business conditions, particularly with regard to foreign trade. This will be achieved by reintroducing a flexible exchange rate regime backed up by strong foreign currency reserves and the full commitment of the Central Bank of Iceland to apply the means necessary to get the desired results. Given the relatively large depreciation that has already taken place, and the contraction in domestic demand which is expected, there is little doubt that following the initial stabilisation period, a significant currency appreciation is to be expected. However, the exchange rate may show considerable volatility in the beginning, which the programme is designed to address.
Another main objective of our programme is to create sound fiscal strategies given the extraordinary challenge that public finances in Iceland are now facing as a result of the cost of bank restructuring and the inevitable revenue loss as the economy slows down. To obtain the fiscal objectives there will be a need to limit the discretionary relaxation in the current budget proposal and to implement significant tightening of the structural balance in the medium term, which is a necessary precondition for a sustainable growth path of the Icelandic economy.
Finally, our programme aims to facilitate the creation of a sound banking system for Iceland by a series of reforms regarding operational procedures as well as a revision of financial regulation in accordance with international best-practice. This will include, among other things, revised articles of bank insolvency as well as general insolvency rules.
Prime Minister Geir H. Haarde:
“This programme will enable us to secure funding and gain access to the necessary technical expertise required to stabilise the Icelandic krona and to provide support for the development of a healthier financial system. As a result, Iceland will commit to a sustainable long-term economic policy, and a plan for the recovery of the Icelandic economy. A thorough review of the Icelandic banking regulatory framework will also form part of this programme,” said Prime Minister Geir H. Haarde.
Prime Minister Geir H. Haarde added:
“With our announcement today of our intention to cooperate with the IMF, Iceland is now in a much better position to establish a sound economic and financial base for the country. We would like to thank all those who have assisted us in these dark days and we now have grounds for a more optimistic view of the future.”
Foreign Minister, Ingibjörg Sólrún Gísladóttir:
”The Icelandic government has taken decisive measures and is working hard to solve the problems it is facing. We realise that the immediate future remains challenging due to the global financial crisis but I am convinced that international cooperation and solidarity is essential for us to recover, reform and regain Iceland’s good reputation abroad. We are confident that the prospective support of the IMF will provide the necessary impetus for some of our friends and allies in the international system to contribute to the reconstruction of the Icelandic financial system.”
i think its very possible that Trevor may be right
we could see the UK asking IMF for money soon, possibly even USA asking IMF, in the past great depressions have often been followed by war, so what ingar is saying sounds crazy but may turn out to be true
things can change overnight in this world and it doesnt always take much to get the ball rolling
lets say IMF decides to add conditions to the current loan request who are unacceptable to Iclandic government, then the government will probably have a backup plan wich will most likely be a loan from Russia, what the russians want is to re gain there posision in the world as a superpower and this is the perfect time, a strategic outpost in Iceland, on UK dorstep an half way between USA and Russia as something that is valuable to them,
but even if we turn to Russia, leave Nato and call back our ambassador in UK we will still pay all our debts, its only a question of how and when
I say that the IMF should not lend money to a country who is clearly not abiding by its promises.
Landsbanki hf Icleand was nationalised and hence all assets and liabilities are transferred to the government. You simply cannot ring fence the local bank and let the international operations just die.
THIS IS NOT ON – THIS IS BLATANT THEFT.
Ingar may sound lunatic, agreed, but at least he’s one of the few Icelanders to call for a new government. It would be encouraging if much more did this, instead of wasting time with ridiculous fingerpoiting at the UK.
I am pleased you are now getting some support but I think rather than blaming everyone else (mainly the UK and US) the Icelandic authorities need to ask themselves some very deep probing questions as to why they got in this mess in the first place.
I hope you truthfully know that you are barking up the wrong tree blaming the UK (or the US) for all or even some of your problems. A majority of the issues in the Icelandic banking system are unique to Iceland and the way it has expanded beyond its means – there were no checks and balances.
Do you really believe anyone in the UK seriously thinks you are terrorists? I for one do not, and I think you delude yourselves if you think anyone really cares – one of the biggest problems UK Icesavers have had over the last week or so is that this is no longer considered a news story in the UK.
The UK government are not blameless in this and could have dealt with things better (couldn’t we all) but I think the real spin about how badly the UK have treated Iceland is driven out of the Icelandic authorities desire to deflect attention from the real problems. One of the biggest problems UK Icesavers have faced over the last week or so is that is no longer a news story – no-one cares – so the suggestion that HMG are doing this to make themselves look good – I think you would be so lucky – they have enough of their own other problems to deal with.
There has been some good news overnight that suggest I might be reunited with my savings before Christmas which is very good news indeed. So this is the last time I will be posting on and viewing this site. Main lesson learnt – once bitten, twice shy – whilst I am sure there are many good people in Iceland I will NEVER EVER trust or knowingly deal with this country again.
You carry on feeling agrieved about alledgely being called terrorists (if that is all you have to worry about then you truely have nothing to worry about) the rest of the world is now moving on but people will remember and be very very cautious about dealing with Iceland in future.
Ingar, you sound like a lunatic.
I can’t see any sensible depositor to put any money in an Icelandic bank in the foreseeable future.
National loans to Iceland are as vulnerable.
Who can in the future believe a word Icelandic people are saying?
Not to honour state-quarantee towards depositors is not forgiven or forgotten.
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The UK is not responsible for Iceland’s economic problems. UK depositors were rushing to get their money out of both Icesave and Kaupthing Edge well before the UK Government took action against them. I myself withdrew my money from Icesave and Kaupthing Edge on 3 October 2008 (apart from a fixed term bond in Icesave, which could not be withdrawn) solely because of press reports about the state of Iceland’s economy, the nationalisation of Glitnir, and the fact that Kaupthing had withdrawn from a US property deal at short notice due to lack of funds. Icesave and Kaupthing had no future in the UK. The UK government was correct to seize Landbanksi assets in the UK, as it owed a great deal of money to depositors, including State authorities. There was a run on Kaupthing Edge (a UK registered company) and it would have gone bust within a day or two, so our authorities put it into administration to protect depositors, and paid ING bank to take over the retail deposits. Administration means that KE’s assets will be realised for the benefit of creditors. This was action taken against two failing banks, not against the Icelandic people, and the UK government did not invoke the law on terrorism, (it was a section on financial security), nor did the UK government (or anyone for that matter) call the Icelandic people terrorists. This is just pure hysteria. Icesave has a lot of UK depositors’ money, and we are determined to get it back. So, while I understand the problems of Iceland, and can sympathise, we have problems of our own, and there is no basis for making the UK your scapegoat.
We do not have to worry about our financial problems anymore. WAR is coming my friends. The great superpowers will be fighting for food and resources soon and Iceland will be one of the pawns in their war. So, get we need a strong leader to guide us in our perilous situation. Get our worthless leaders out and get a new one who can save us.
I truly hope it works. The £ is slipping fast, and I fear you may be the entree and we the main course. I hope the IMF have still got some dosh left when we get there.