Weeks of waiting: IMF reviews Iceland's financial SOS appeals

On Sunday, Icelandic Minister of economics said he was quite optimistic about the International Monetary Fund (IMF) review that could be finished within weeks, and could potentially provide core aid for the Icelandic nation hit by the financial crisis.

 
Last week, Gylfi Magnusson joined Finance Minister Steingrimur Sigfusson and IMF Managing Director Dominique Strauss-Kah in Washington to discuss the aid program standstill, which was caused by a scandal over Iceland’s “Icesave” debts to the Netherlands and Great Britain.

Magnusson was positive that they had had quite productive conversations with Fund representatives concerning apparent signs of Icelandic economic progress. Moreover, he laid stress on the fact that the Fund’s next review of performance under the economic program would not be postponed any further.

In 2008, major Icelandic banks went bust, causing a falling currency and a deep recession. After that case, the IMF provided Iceland with loans of more than $2 bln.

The IMF has already secured the necessary initial payments under its scheme; nevertheless, a deadlock of over $5 billion that Iceland has to pay to the Netherlands and Great Britain, as compensation for overseas savers who lost their money during the Icelandic crisis, has postponed any further help.

According to Magnusson’, it would be necessary for Iceland to find a solution taking into account  discussions with the governments of the UK and the Netherlands as well as requirements of Nordic neighbours, who have promised their assistance.

He expressed his hope for finding a solution and that the next review could happen in the next couple of weeks.

Primarily, the second review of Iceland’s IMF program had been fixed for late January, but then it was delayed after attempts to drive a bargain over the country’s debts failure.

Iceland is in need of assistance to rebuild its economy, to boost its capital controls and regain access to international markets.
The country hopes to attract the IMF and other lenders’ funds to flow again even if the “Icesave” case is not under control yet.