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Will the IMF open up for loans to Iceland?

Iceland's Finance Minister gave a briefing on the economic situation of the devastated economy at the Nordic Council Session in Stockholm. The IMF is expected to approve an assessment of Iceland’s credit rating on 28 October. This will release the first part of a loan package from the IMP and the Nordic countries.

Oct 27, 2009

"The economy has grown slightly better than expected. GDP has fallen 8.4 per cent in 2009 instead of 10 per cent as we had feared. And the unemployment rate of 7.2 is also lower than we had anticipated", said Sigfússon.

Photographer
Magnus Fröderberg/norden.org

The IMF Board will consider Iceland's creditworthiness at a meeting in New York on 28 October.

An agreement between Iceland and the Netherlands and the UK respectively concerning the so-called Icesave affair, in which bank customers in the two countries have lost large sums of money, paves the way for a reassessment of the country's credit worthiness.

In this connection, a settlement of Icelandic debts of up to ISK 750 billion over eight years will be agreed upon, starting from 2016.

The population of Iceland is facing difficult times because of the irresponsible behaviour that led to collapse of the banks,

the Finance Minister, Steingrímur Sigfússon, told the Nordic Council Business and Industry Committee and the Presidium on 27 October at the Nordic Council Session in Stockholm, where he gave a briefing on the current situation in the country.

An economy under pressure

The conclusion was that the situation is bad, but it could, after all, be worse.

"The economy has grown slightly better than expected. GDP has fallen 8.4 per cent in 2009 instead of 10 per cent as we had feared. And the unemployment rate of 7.2 is also lower than we had anticipated", said Sigfússon.

“However the population of Iceland is facing difficult times because of the irresponsible behaviour that led to collapse of the banks", he elaborated.

Unemployment expected to rise to 10 per cent, although this is lower than in Sweden, for example, and the budget deficit is projected to increase by ISK 500 billion over three years, equivalent to more than one year's national budget.

The Nordic politicians expressed concern about the depopulation of Iceland, where many young people in particular are leaving the country.

"It is a problem, but at the same time it is good for Iceland that people can move to the other Nordic countries, where many of course have studied or worked in the past. As long as they come back again when times are better", said Steingrímur Sigfússon.