Iceland close to IMF rescue

The International Monetary Fund (IMF) and the Icelandic government are said to be very close to reaching a rescue deal to prop up the country’s struggling financial system, along with help from their neighbours as well as far afield as Japan.

In a show of Nordic solidarity the central banks of Denmark and Norway will offer Iceland a euro swap facility worth a total of 1.5 billion euros although thus far the central bank of Iceland has used up 400 million euros of that in a bid to stabilise the market.

The Icelandic Industry Minister, Oessur Skarphedinsson, said that the IMF is getting a plan ready which they will present to the Icelandic government.

It is believed that the move will be funded by a loan from the Russian government and the deal has been reported to be around 6 billion dollars.

Following the collapse of the banking system (namely the nationalisation of Glitnir Bank hf, Landsbanki Islands hf and Kaupthing Bank hf ) as well as the foreign-exchange market, aid is urgently needed.

The prime minister, Geir Haarde, has briefed the nation on a live television broadcast following the announcement.

He indicated that more information would be made available once the IMF had made a firm decision. However it is clear that the forthcoming economic forecasts are proving difficult due to the economic instability of the nation.

Commerce Minister Bjorgvin Sigurdsson said following a cabinet meeting, he expected an agreement could be concluded by tomorrow.

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