Iceland political activists get answers from IMF

sunRepresentatives of the grassroots Solidarity Alliance met with IMF representatives in Iceland this week. It was the second time the group had held meetings with IMF officials. The IMF is apparently confident that Iceland can look forward to reaching the bottom of the current economic crisis before the end of 2009.

Participants discussed the onset of the Icelandic economic crisis. A statement says that the IMF and government plan has three basic goals: to revive the banks, to revive the currency and to return the state treasury to self-sufficiency.

The statement from the meeting says that tangible recovery signs will be visible in the second half of 2010 and that the financial system should be fully functioning again by the beginning of 2011. IMF representatives admit that reorganisation of the banks is taking much longer than expected. In fact, one could say the IMF and government plan has made very little progress in this area over the last eight months, reports.

The group then asked why the IMF wants Iceland’s interest rates to remain high instead of lowering them rapidly to help homeowners and businesses. The IMF representatives responded that the rates should remain high for the sake of the Icelandic krona exchange rate to protect export revenues and prevent an imports collapse. The rate of the krona has dropped sharply over recent weeks and months.

On the subject of Argentina: Iceland should not stop co-operation with the IMF and default on foreign loans as Argentina did, because Argentina enjoyed great support from its neighbours which Iceland cannot count on in its current situation.

The statement also clearly stated that the IMF has not been discussing Icelandic matters privately with the British government and never will do – despite Gordon Brown’s vague allusion to such meetings.

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