Icelandic prime minister optimistic on Icesave debt repayment arrangement

City A.M. Reporter
Iceland’s Prime Minister has insisted that a new Icesave debt repayment deal from Britain and the Netherlands would considerably ease the island nation’s financial burden.

The two countries have offered new terms for repaying more than $5bn (£3.23bn) lost by savers during Iceland’s financial crisis, potentially heading off a politically risky referendum on the Icesave debt crisis.

“I believe this is something we could work with,” Prime Minister Johanna Sigurdardottir said in comments posted on the web site of Iceland’s state radio. The new proposal would mean “considerably easing the payment burden on Iceland”, she added.

The Icelandic government will respond to Britain and the Netherlands with its assessment of the new proposal within the next two days following a meeting between party leaders on Saturday.

The main feature of the plan is a floating interest rate designed to ease Iceland’s burden as it repays $5bn to the two European Union countries.

The offer maintains other elements of a deal the three sides agreed in October, including full debt repayment and a seven-year grace period, a source said.

Iceland owes Britain and the Netherlands more than $5bn lost by savers when Icelandic bank Landsbanki collapsed in late 2008. The British and Dutch governments reimbursed their citizens, and now they want their money back.