From Iceland — Icesave Deal Signed

Icesave Deal Signed

Published October 20, 2009

Representatives from Icelandic, British and Dutch authorities yesterday signed an agreement over Icesave, over a year after the company collapsed. Prime Minister Jóhanna Sigurðardóttir called the terms of the agreement “acceptable”, and that the matter wasn’t going to move any further.
Iceland has agreed to pay 55 billion ISK (about 443 million USD) each year – about 2.5% of its current GDP of 17,549,000,000 USD. In addition, Iceland will pay an interest on this amount, or 15 billion ISK (about 120 million USD). Payments are expected to continue every year until the 2024. If the debt has not been fully paid at this time, it will be extend until 2030. It is expected that 90% of Landsbanki’s assets will go into paying down Icesave, so exact figures on how much taxpayers will be forking out is still not completely clear.
There is still much disagreement over the deal, of course. Conservatives argue that it will cost the government too much, necessitating budget cuts and higher taxes. Progressive Party Sigmundur Davíð Gunnlaugsson complained that opposition parties had been shut out of discussions, and kept in the dark about the negotiation process. Margrét Tryggvadóttir, an MP for The Movement, told reporters that the deal more or less puts Iceland in the same spot as developing nations, i.e., under the burden of a great debt where it is only possible to pay down the interest.

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