Iceland expressed optimism yesterday it was close to a new agreement with Britain and the Netherlands on the country’s “Icesave” debts, a deal which could unfreeze vital foreign aid.

Officials from the three countries have been meeting in London all week on how Iceland will repay Britain and the Netherlands more than $5 billion that was lost in Icesave online accounts when the Icelandic bank Landsbanki collapsed late in 2008.

The government of the North Atlantic island nation said the Icelandic negotiators were now on their way to Iceland to meet with officials there, but declined to comment on the outcome of the talks in London.