IMF Survey: IMF and Iceland Outline $2.1 Billion Loan Plan

IMF News, October 24, 2008

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Publication date: October 24, 2008
IMF staff mission and Icelandic authorities reached an outline loan agreement for a $2.1 billion two-year Stand-By loan.
Following review by the IMF's management, the agreement could be presented to the IMF Executive Board for approval in early November.
Iceland would be able to draw $833 million immediately after Board approval.

Aim: support an economic recovery program to help the island restore confidence in its banking system and stabilize its currency (krona).
IMF Managing Director Dominique Strauss-Kahn stated the program:
- "aims to restore confidence to the banking system, to stabilize the krona through strong macroeconomic policies, and to help the country achieve medium-term fiscal consolidation following the collapse of its banking system."
- "The authorities' program is focused on the essential upfront measures needed to restore confidence and economic and financial stability. The overarching goal is to support Iceland's effort to adjust to the economic crisis in a more orderly and less painful way."

The IMF characterized the loan access as high: equivalent to 1,190 percent of Iceland's quota in the IMF.
Strauss-Kahn argued these strong policies and high access "deserve the support of the international community."

The IMF has more than $200 billion of loanable funds and can draw on additional resources through two standing borrowing arrangements with groups of IMF member countries.
The IMF emphasized its readiness to lend quickly through emergency financing procedures to member countries needing help during the ongoing crisis.
The IMF was holding talks with several countries about possible new lending programs and providing confidential policy advice to governments in emerging and developing economies on how to adapt to the current turmoil.
Strauss-Kahn helped spearhead the international response during the IMF-World Bank Annual Meetings in Washington on October 10-13.
The IMF noted that financial turmoil hitting advanced economies is starting to slow growth in many emerging markets and that "the world economy is entering a major downturn in the face of the most dangerous financial shock in mature financial markets since the 1930s," according to the IMF's World Economic Outlook.

Source: IMF Survey online, October 24, 2008 — IMF and Iceland outline $2.1 billion loan plan.