Iceland looks for support from Nordic nations
07/11/2008
Iceland hopes to hear that its application to the International Monetary Fund for a $2bn loan to support its economic revival has been approved. Once official approval of the IMF loan has been secured, the Nordic countries will begin considering how much they are prepared to offer.
The gathering at the Ministry of Finance was a strong sign that Denmark, Sweden and Finland are drawing closer to announcing a multibillion euro package of loans after Norway agreed a €500m advance last week.
The island’s government has also sent an application for funds to the US Federal Reserve and the European Central Bank and has been in contact with the Bank of Japan through its embassy in Tokyo.
Following the collapse of Iceland’s banking system, its economy is expected to contract up to 10 per cent, unemployment is forecast to spike to about 8 per cent and inflation is set to reach 20 per cent or more, according to economists.
Iceland raised interest rates recently from 12 per cent to a record 18 per cent.
