Iceland on Saturday received a compensation proposal from Britain and the Netherlands over the collapsed Icesave bank that heavily slashes Reykjavik’s repayment burden, the prime minister said.
“The proposal includes lowering to a huge extent the repayment burden for Iceland,” Icelandic Prime Minister Johanna Sigurdardottir told RUV public radio.
Britain and the Netherlands are requesting the reimbursement of billions of dollars from Reykjavik for compensating 320,000 British and Dutch savers who lost their money in the collapse of the online Icesave bank.
The Icelandic government has been negotiating with Britain and the Netherlands in a bid to avoid putting the divisive Icesave issue to a referendum, which polls predict would be largely won by a “no” vote.
“There is an obvious will among government in the UK and the Netherlands to get an agreement with the Icelandic government,” Icelandic Finance Minister Steingrimur Sigfusson told reporters following a meeting at which the proposal was examined.
Iceland’s parliament on Dec. 31 narrowly approved the terms of a payout to London and The Hague, but Iceland’s president refused to sign the bill and instead put the issue to a referendum to be held on March 6.
The Icelandic government will respond to Britain and the Netherlands with its assessment of the new proposal within the next two days following a meeting between party leaders on Saturday, the radio reported on its Web site.
The main feature of the plan is a floating interest rate designed to ease Iceland’s burden as it repays US$5 billion to the two EU countries, a source familiar with the situation said on Friday.
The offer maintains other elements of a deal the three sides agreed in October, including full debt repayment and a seven-year grace period, the source said.
A rejection of the bill would further damage Iceland’s standing with capital markets and could be interpreted as a vote of no confidence in the government and cause a political crisis.
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