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Iceland forms center-right govt, halts EU talks

Iceland forms center-right govt, halts EU talks

The leader of Iceland's center-right Progressive Party was chosen as the island nation's new prime minister Wednesday and promptly announced a halt to talks with the European Union about Iceland joining the 27-nation bloc.
Sigmundur David Gunnlaugsson spoke about policy shift at a press conference after being selected premier.
"The government intends to halt negotiations between Iceland and the European Union," he said. "We will not hold further negotiations with the European Union without prior referendum."
The new center-right government will also include Bjarni Benediktsson, head of the Independent Party, who will serve as minister of finance.
Icelanders voted April 27, returning to power the parties who had governed for decades before the 2008 economic collapse, the conservative Independent Party and the rural-based Progressive Party.
The parties had ruled together from 1995 until the 2008 fiasco. After the collapse of the Icelandic banking sector that year, Icelanders voted in a liberal government led by the Social Democrats and the Left-Greens.
The small North Atlantic nation with a population of 320,000 went from economic powerhouse to financial disaster almost overnight when its main commercial banks collapsed within a week. The value of the country's currency plummeted, while inflation and unemployment figures soared. Iceland was forced to seek bailouts from Europe and the International Monetary Fund.
The Progressive Party promised during the campaign to cut Icelanders' housing debts by 20 percent, taking money from foreign creditors.
"The government keeps open the option of creating a special adjustment fund to achieve its goals," Gunnlaugsson said, promising further details soon.
That fund would help reduce loans taken out in foreign currencies, which soared as the Icelandic krona depreciated. Many Icelanders took out mortgages and car loans in foreign currencies prior to the financial collapse.
The government will also focus on lowering taxes and lifting capital controls to increase foreign investment.


Updated : 2020-11-30 14:03 GMT+08:00