Dec. 1 (Bloomberg) -- Iceland won’t seek amendments to an accord with the U.K. and Netherlands obliging the island to cover depositor guarantees, paving the way for lawmakers to pass the bill this month, Finance Minister Steingrimur Sigfusson said.
“We’ve exhausted our negotiating options,” Sigfusson said in an interview in Reykjavik yesterday. “I’m still optimistic that this bill will pass long before Christmas.” Parliament is currently debating the accord in the second of three sessions.
Opposition lawmakers had threatened a second round of brinkmanship on the bill, which has already undergone one set of amendments to satisfy demands made by the parliament. Failure to ratify the agreement would prolong an international spat that culminated in the U.K.’s deployment of anti-terror legislation to freeze Icelandic assets at the end of last year.
The island will be in “big trouble,” if it doesn’t conclude the depositor guarantee talks, Prime Minister Johanna Sigurdardottir said in an interview yesterday.
“I’m certain that the deal that’s on the table is the best possible deal we could get,” she said. “If it should emerge at a later stage that Iceland wasn’t legally obligated to cover these deposits, we will call on the U.K. and the Netherlands to revisit the agreement.”
Credit default swap spreads on 5-year sovereign debt rose to 411 basis points on Nov. 30 from 353 basis points on Oct. 30.
‘We’re Trying’
Iceland agreed on Oct. 19 to borrow 2.35 billion pounds ($3.92 billion) from the U.K. and 1.2 billion euros ($1.81 billion) from the Netherlands to cover Internet bank deposits in so-called Icesave accounts created by failed lender Landsbanki Island hf.
Failure to ratify the accord by Dec. 1 would allow the U.K. or the Netherlands to cancel the loans, though the two countries haven’t indicated they’ll do this, Sigurdardottir said.
“The U.K. and the Netherlands are aware of the fact that we are trying our outmost to pass this bill as speedily as we can,” she said.
The lack of an agreement covering foreign depositor claims prompted the International Monetary Fund, on which Iceland is relying for a $2.1 billion loan, to shelve a review and disbursement of funds until an initial accord was struck. The island at the end of October received a $167 million tranche.
“We hope that a second review of our economic program will take place in January,” Sigfusson said.
Thousands of foreign depositors risked losing their savings after Landsbanki collapsed with the rest of Iceland’s debt-laden banking system 13 months ago. Iceland is relying on a $4.6 billion bailout from the IMF and Nordic countries to avert bankruptcy.
Source:bloomberg.com/
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