Joint press release on Nordic credits to Iceland

Denmark, Finland, Iceland, Norway, Sweden

                                                                                                1 July 2009

Loan agreements have today been signed between Iceland and Denmark, Finland and Sweden respectively, and between Seðlabanki Íslands, guaranteed by Iceland and Norges Bank, guaranteed by Norway. Under the agreements the Nordic lenders stand ready to provide Iceland with total credits of 1.775 billion euro.

The loans will be provided in relation to and as a support of Iceland’s economic stabilisation and reform programme with the International Monetary Fund (IMF). The loans are intended to strengthen Iceland’s foreign exchange reserves. The Nordic creditors – Denmark, Finland, Norway and Sweden – are with these loans making an important contribution to international crisis management.

Building on the decision by the Nordic Prime Ministers at the end of October 2008 to establish a Nordic joint task force on support to Iceland, the Nordic countries have worked closely together and are now pleased to have reached agreement on the details of the loans. The loans’ maturity of 12 years provide Iceland with important long-term financing and is a reflection of the lenders’ solidarity and long-term commitment to assist Iceland in its current serious financial and economic situation.

Signing of the agreements does not imply immediate disbursement of the Nordic loans. Disbursement of the loans will be in four equal tranches tied to the first four reviews of Iceland’s IMF programme with the payment of each tranche conditional on the approval of the relevant review. Iceland is committed to implement its stabilisation and reform programme with the IMF. In this context, Iceland’s recent agreements with the Netherlands and UK covering Iceland’s Icesave commitments is an important step.

Going forward, the specification of Iceland’s fiscal consolidation programme and measures for restructuring the banking sector in a fair and equitable way are important elements for the programme. As concluded by the Icelandic authorities and the IMF , further measures in these areas are being worked on and need to be put in place before the first review of Iceland’s IMF programme and the accompanying first disbursement of the Nordic loans.