2008-11-15 04 h 00 :: channelnewsasia.com :: Iceland-IMF moving closer to loan agreement

http://www.channelnewsasia.com/stories/afp_world_business/view/389971/1/.html

Iceland-IMF moving closer to loan agreement

Posted: 15 November 2008 0400 hrs

REYKJAVIK : Iceland and the International Monetary Fund are now close to an agreement on an IMF credit for the country, as objections by Britain and The Netherlands are being resolved, the Icelandic prime minister said Friday.

"We are moving toward an agreement and we expect the IMF to put Iceland on its agenda after this weekend," Geir Haarde told a press conference.

The IMF had initally planned to consider Iceland's request for a loan of around 2.0 billion dollars on November 5 following a preliminary accord between the fund and Icelandic authorities struggling to shore up their battered financial system.

But the November 5 session was cancelled in response to a request by Britain and The Netherlands that a row over deposits by their citizens in an Icelandic bank be settled.

"A solution to settle the Icesave conflict is in sight," Haarde said.

British clients of Icesave, the British unit of Iceland's second largest bank, Landsbanki, had their accounts frozen when Landsbanki was nationalised in October.

The British government, relying on anti-terrorist legislation, then seized the assets of the Icelandic bank in Britain, sparking outrage in Reykjavik.

Iceland and The Netherlands meanwhile worked out an arrangement under which the Icelandic government would compensate each Dutch depositor up to a maximum of 20,887 euros (28,240 dollars).

The Dutch government agreed to provide a loan to Iceland to help it implement the restitution.

- AFP /ls