Iceland Prime Minister accused of blocking loan

johanna1(Updated 17.24 GMT) The Progressive Party in Iceland believes Prime Minister Johanna Sigurdardottir is deliberately trying to block a potential massive loan to the country from Norway completely unconnected to the IMF package. The Prime Minister described the allegations as preposterous.

Members of the Progressive Party met with Norwegian parliamentarians earlier in the week to discuss, among other things, the idea of Norway lending Iceland a sizeable chunk of money. The amount under discussion is up to NOK 100 billion, which is ISK 2,200 billion.

Representatives of the Norwegian Centre Party, one of three members of the coalition government and sister party to the Progressives in Iceland, are said to be enthusiastic about the idea. The Labour Party of Prime Minister Jens Stoltenberg is, however, less enthusiastic.

Johanna Sigurdardottir sent Stoltenberg a letter on Monday asking if such a loan would likely be offered to Iceland. Stoltenberg responded on Thursday saying that it is not likely. The issue has not been discussed within the Norwegian government.

Sigurdardottir told is that Stoltenberg’s letter was categorical. “It was made clear that the Norwegians are well-intentioned towards us, but their official position remains that the money they loan Iceland will be part of the Nordic loan offered within the IMF package and they do not intend to change that,” she said.

Leader of the opposition Progressive Party, Sigmundur David Gunnlaugsson accused Sigurdardottir of having asked for such a response from Stoltenberg. He said that the Norwegian Labour Party was looking to her Social Democrats for support in the issue and would be guided by them in its position. But as the Social Democrats wish to continue with the IMF package, the Labour Party has not offered its support to the Progressive and Centre Parties’ plan.

“That is a preposterous claim and I don’t know how they imagine I could just order up a conclusion from the Norwegian Prime Minister. Absolutely ridiculous. It is also absurd that I would try to block a condition-free loan to Iceland.”

Since this news first broke, the Icelandic Prime Minister’s office has decided to release the PM’s initial email and Stoltenberg’s response to the public. They can be viewed translated into Icelandic here, and in Norwegian by clicking the two links at the bottom of that page.

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