REYKJAVIK, Oct 18 — Iceland's budget committee meets today to finalise a new law on reimbursing Britain and the Netherlands for deposits lost when the island's banks collapsed last year, the daily Morgunbladid said.
Iceland passed a law in August to repay more than US$5 billion (RM17.5 billion) lost in high-interest “Icesave” accounts, but Britain and the Netherlands baulked at the terms, holding up aid from the International Monetary Fund and other lenders for the island's stricken economy.
Morgunbladid said the proposed changes to the law would mean the government's repayment guarantee will not run out in 2024 with remaining debts needing to be renegotiated at that date, as stated in the old law.
This was the main objection of Britain and the Netherlands.
The Icesave issue has been very unpopular in Iceland and a junior minister has already resigned over changing the law to suit creditors.
Speculation that attempts to pass a new Bill could bring down the coalition government have been dismissed by Prime Minister Prime Minister Johanna Sigurdardottir.
The paper said that the leaders of the coalition parties believe they have the necessary majority to get the changes through parliament. — Reuters
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The three largest banks in the country have combined debts of over six times the GDP. Like many countries, this is a case of private debts and not state debts. Because of uncontrolled private sectors foreign investments, Iceland is bankrupt and the state, and all its people now have to bear the blunt of it.