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Iceland PM says she's seeking repayment talks

Iceland PM says she's seeking repayment talks

Icelandic Prime Minister Johanna Sigurdardottir said Friday she was pressing Britain and the Netherlands to renegotiate payment of $5.7 billion owed for lost bank deposits, as she seeks to avoid a referendum on the issue that could stall Iceland's bailout loans.
But both countries said they had not officially been asked to renegotiate, while Sigurdardottir's pleas to the International Monetary Fund to keep paying out loans without delay appeared to have had little sway, as the organization suggested its hands may be tied.
The government was forced into holding the nationwide vote, which must be held by March 6, after President Olafur R. Grimsson invoked a rarely used power to refuse to sign the so-called Icesave bill.
The bill, narrowly passed by Parliament, outlines the terms under which Iceland must repay the British and Dutch governments for funds they used to compensate their citizens after the Icesave Internet bank went bust. If Iceland can negotiate less strict repayment terms that are also acceptable to opposition parties, the referendum could be avoided.
While the government argues that the bill is necessary for Iceland's economic recovery, opponents are angry that Britain and the Netherlands succeeded in imposing tougher terms on repayment.
Sigurdardottir said that London and The Hague have so far not agreed to start negotiations, but she was hopeful they would agree.
"We have been in steady contact with them and the Nordic countries in the last few days," she told RAS 2 radio. "I expect it to become clear in the next days whether we will sit down to negotiate again with the Dutch and the British."
The British Treasury said that Iceland had "reaffirmed its commitment to the Icesave loan and winning the referendum" in their recent conversations.
"The U.K. government continues to expect Iceland to live up to its obligations," a spokesman said on customary condition of anonymity.
Dutch Finance Ministry spokeswoman Saskia Kramendonk also said the ministry had not received any official request from Iceland to renegotiate the Icesave deal.
"At this stage there are no contacts about renegotiation whatsoever," she said.
Sigurdardottir noted that if the bill is rejected by the public at a referendum, the agreement would have to be renegotiated anyway, and then Iceland would be in a worse position to do so.
The latest poll on the referendum, taken by Capacent Gallup, showed 62 percent of respondents intended to vote against the Icesave bill in the referendum, while 38 percent wanted the law to go ahead as approved by parliament.
Sigurdardottir said she planned to meet with opposition leaders again on Friday to continue to hammer out a deal to take to the British and the Dutch. Among key objections in Iceland are British and Dutch revisions to the original repayment deal that extended time limit of the repayment guarantee and removed Iceland's right to challenge the payment under international law.
The dispute has jeopardized Iceland's bid to join the European Union and threatened a crucial $4.6 billion bailout package promised by the IMF and Nordic countries.
The IMF has already bestowed some of that money and is due to carry out a review of Iceland this month to determine the next batch of funding. Iceland is worried that the money could be held up until it settles the Icesave issue.
In a letter to the IMF Managing Director Dominique Strauss-Kahn, Sigurdardottir requested that the program continue without delay.
"The review of the economic program is of fundamental importance for the recovery of the Icelandic economy," she wrote in the letter, released by her office.
But Strauss-Kahn said that the IMF relied on international cooperation.
"If many countries in the international community feel that we should wait with our review of our recovery package for Iceland, then we must do that," he said in Washington D.C.
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AP Business Writer Jane Wardell reported from London. AP Writer Mike Corder contributed to this report from The Hague, Netherlands.


Updated : 2021-10-18 01:54 GMT+08:00