Economic programme in cooperation with IMF

The Icelandic government decided to seek assistance from the International Monetary Fund (IMF) immediately after the onset of the financial crises. An agreement and an economic programme was finalized by October 24 2008.

On November 19th the IMF approved Iceland’s request for a two year stand-by arrangement. Iceland will receive USD 2.1 billion from the IMF. Additional loans of up to USD 3 billion have been secured from Denmark, Finland, Norway, Sweden, Russia, and Poland. The Faroe Islands have announced that they would lend Iceland USD 50 million.

The IMF stand-by arrangement is based on an economic programme outlined in a Letter of Intent. The programme was formulated by the Government and Central Bank of Iceland in close consultation with the IMF.

The programme focuses on three main areas:

• Stabilizing exchange rate and rebuild confidence in monetary policy.
• Review and revise fiscal policy with the aim of maintaining a manageable level of public sector debt and debt service in spite of lost revenues and increased expenditures.
• Banking sector restructuring and reform of the insolvency framework in accordance with transparent, internationally recognized principles.

One overarching goal:

Re-establish confidence in the Icelandic economy.

Further information:

• The Icelandic Economic Programme – April 2009 (pdf)
• Statement by the IMF Mission to Iceland, 13 march 2009
• IMF concludes its February/March visit
• IMF Mission to Iceland: Government Actions Proceeding on Schedule
• Read an interview with the IMF’s new mission chief for Iceland,
  Mark Flanagan, on the IMF’s website
• Timeline of Iceland’s economic program with the IMF(pdf)
• Iceland: Stand-By Arrangement
  – Interim Review Under the Emergency Financing Mechanism(pdf)