International Monetary Fund approves Iceland's request for a two year stand-by arrangement
Iceland will receive USD 2.1 bn. from the IMF. Additional loans of up to USD 3 bn. have been secured from Denmark, Finland, Norway, Sweden, Russia and Poland. The Faroe Islands have announced that they would lend Iceland USD 50 million. Of the IMF loan, USD 827 million will be immediately available with the remaining sum made over in eight equal installments of about USD 155 million each, subject to quarterly reviews.
The IMF program will last two years and Iceland will repay the loan over the years 2012-2015. The funds made available through the IMF will be used to support the currency, the Icelandic krona, which will be floated as soon as possible. It is to be expected that the currency market will stabilize soon and that international money transfers will subsequently return to normal.
The Government of Iceland welcomes the action taken by the IMF, its Nordic neighbours, Russia, Poland and the Faroe Islands which it sees as a very positive step towards bringing financial stability after a period of uncertainty.
Prime Minister, Geir H. Haarde said: “We welcome the announcement made by the IMF today which I believe is an important step forward towards the rebuilding of our economy. With the IMF agreement in place, we can commence our recovery program with full force and bring our economy back on track. I thank those countries who also contributed to the loan package. Our task now is to overcome the difficulties we face and to regain the trust and the standing among other nations which we enjoyed before the impact of the global financial crisis struck Iceland”.
Minister for Foreign Affairs, Ingibjörg Sólrún Gísladóttir said: “We appreciate the approval from the IMF and the trust in Iceland which it represents. The participation of the IMF in rebuilding the Icelandic economy is very important. It gives us a solid platform for re-establishing the credibility which will be necessary in restructuring a viable Icelandic economy.”