ICELAND HAS held informal talks with the British and Dutch governments about repaying €3.8 billion their citizens lost in Icelandic banks ahead of a referendum on the matter.
London and The Hague have compensated citizens who had invested in high-interest accounts with the collapsed Landsbanki bank and are waiting for repayment from Reykjavik.
Widespread public anger over the repayment terms prompted Iceland’s president, Olafur Grimsson, to refuse to sign the Bill into law last month. Instead it will be put to the people in a referendum on March 6th.
According to reports, the current repayment deal is the equivalent of 40 per cent of Iceland’s gross domestic product, the equivalent of a payment of €45,000 for every Icelandic household.
Iceland’s government views the upcoming vote with increasing alarm: officials say uncertainty about the vote’s outcome has crippled its access to money markets and frozen its reforms.
The government is worried of even greater long-term effects if, as polls suggest, voters reject the plan.
Prime minister Johanna Sigurdardottir has insisted that Iceland will repay the money it owes, despite public dissatisfaction with the repayment terms.
“Icelanders realise the importance of fulfilling the state’s international commitments,” she wrote last month.
The new deal on the table reportedly involves a quicker repayment through the sale of assets from the failed Landsbanki.
British and Dutch negotiators are reportedly open to a revised deal if it has cross-party support.