IMF confirmed international loan to Latvia

By Nina Kolyako, BC, Riga,
December 24 2008

Yesterday evening, the International Monetary Fund’s (IMF) board confirmed an international loan to Latvia.

Latvia will receive EUR 7.5 billion (LVL 5.27 billion) worth of financial support, writes LETA.

The European Union plans to allocate a medium-term loan to Latvia worth up to EUR 3.1 billion (LVL 2.18 billion).

Also participating in issuing Latvia the loan is the International Monetary Fund (IMF) – EUR 1.7 billion (LVL 1.19 billion), Sweden, Denmark, Finland and Norway – EUR 1.8 billion (LVL 1.27 billion), and the World Bank – EUR 0.4 billion (LVL 0.28 billion).

The European Reconstruction and Development Bank, the Czech Republic, Poland and Estonia will allocate Latvia another EUR 0.5 billion (LVL 0.35 billion), which is a total of EUR 7.5 billion (LVL 5.27 billion).

The loan will be issued to Latvia gradually over the next three years.

Source

Published in: on December 27, 2008 at 4:38 am  Comments Off on IMF confirmed international loan to Latvia  
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World Bank: Mexico’s loan approved plus an offer of another one

World Bank offer Mexico $5.5 billion in loans
December 12 2008

MEXICO CITY

The World Bank and the Inter-American Development Bank say they will offer about $5.5 billion in loans to Mexico in 2009 to help finance infrastructure, development and anti-poverty programs.

The banks say they are helping countries like Mexico weather the current credit crisis and supporting government plans to boost economic activity during the global downturn.

Bank representatives said Thursday that the World Bank will offer as much as $3 billion for a variety of projects.

The IDB will kick in as much as $2.5 billion, with another $1 billion possible.

Much of the money will go to low-income housing, public works, transport and anti-poverty programs.

Source

World Bank Approves US $17.2 Million for Results-Based Management and Budgeting
WASHINGTON, DC,
December 11, 2008

Available in: Español

The World Bank Board of Executive Directors (WB) approved today a US$17.2 million loan to the Mexican government to implement the Results-Based Management and Budgeting Project, which seeks to improve the quality of public spending in Mexico and to help make budgeting a tool for good government.

The project seeks to promote improvement in federal public administration management, to set in motion a new framework for result-based budgeting and produce high-quality information on performance. This should encourage the administration, government officials and legislative policy makers to employ this information when making decisions, thus significantly improving the efficiency and effectiveness of public spending. It also intends to require ministries and federal entities to provide information to decision makers and the general public about spending programs in a timely, rigorous and accessible manner.

Mexico has made several economic reforms and democratic transformations in its political system since the 1980s and 1990s. However, the reform in public administration has been left pending. This project intends to support the Mexican government in accomplishing this task, with the objective of making public administration more efficient and effective for the benefit of the Mexican people. The idea is to turn quality information into a priority in public spending throughout the whole budgetary cycle, from planning and execution to evaluation and auditing,” said Axel van Trotsenburg, World Bank Director for Mexico and Colombia.

Improved management practices will be created through this program and, consequently, fiscal discipline will receive great support. Resources will be assigned more efficiently by improving the alignment between programs and government policies and focusing on the objectives of the public programs, also generating greater budget transparency and accountability at different levels of government and among those responsible for providing services.

The project consists of five components:

  • Design and implementation of a Management Improvement Program.
  • Development of an Integrated Information System for Results-Based Management and Budgeting (SISED).
  • Strengthening Financial Management for Results-Based Budgeting.
  • Consolidation of Results-Based Budgeting and the Evaluation System.
  • Monitoring and Evaluation of the Performance Evaluation System (SED).

During the last decade, the World Bank has implemented different projects in Mexico which have helped strengthen the State’s capacity for and efficiency and quality of public spending. The discussions we have held with the government have been based on activities involving analysis and consultation which have given shape to the design of this operation,” said van Trotsenburg. “The challenge is to establish a mechanism that ensures that the results of the evaluations are taken into account in the government’s future plans and decision making,” he concluded.

The National Development Plan 2007-2012 establishes clear goals in improving the administration, processes and results of Federal Public Administration, and considers that accomplishing a reform based on modernizing budgeting processes will ensure that public spending is executed more efficiently and more transparently. The Performance Evaluation System (SED) is the legal framework for this initiative.

The SED will provide two types of information on the performance of programs financed by public spending.

  • Consolidation of information on results, impact or effectiveness in public spending, obtained through the evaluation of programs or other sources.
  • Information on the quality of public administration, which is the central point of the Program to Improve Management.

This technical assistance loan is a comprehensive part of the Bank’s commitment to the Mexican government to support results-based management and budgeting. The operation will support the institutional, technical and physical aspects, particularly of the Ministry of Public Administration and the Ministry of Finance and Public Credit, which are responsible for the SED, and will act as counterparts to the project. The World Bank will contribute its international experience and knowledge, as it did during the International Conference on Results-Based Budgeting organized together with other international institutions in Mexico City last June.

This project is consistent with the new Country Partnership Strategy that the WB signed with the Mexican authorities last April, which establishes providing support to improve the performance of the institutions and the citizenship’s perception of the public sector through several initiatives, including results-based budgeting.

Nacional Financiera (NAFIN) is the financial agent for the loan, which will be implemented by the Ministry of Finance and Public Credit and the Ministry of Public Administration.

It is a fixed-spread loan with a front-end fee of 0.25 percent and an 18-year grace period. The total amount is to be paid in a single disbursement in 2026.

Source

IMF Grants Malawi $77 Million Loan

IMF Grants Malawi $77 Million Loan to Cushion Trade Shocks

By Frank Jomo

December  5 2008

The International Monetary Fund granted Malawi a one-year loan facility of 10.8 billion Malawi kwacha ($76.8 million) to help it adjust to trade shocks caused by rises in fuel and fertilizer prices in the first half of 2008.

The loan, which falls under the lender’s Exogenous Shocks Facility, will allow Malawi to draw $51.4 million immediately, the IMF said in an e-mailed statement yesterday.

“The facility will help to contain the pressure on the balance of payments and rebuild external reserves,” according to the statement.

Source

Published in: on December 5, 2008 at 10:23 am  Comments Off on IMF Grants Malawi $77 Million Loan  
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Pakistan Promises IMF to Raise Rates If Reserves Drop and Eliminate Electricity subsidies

By Michael Dwyer and Khalid Qayum

December 3 2008

Pakistan’s central bank promised the International Monetary Fund as part of a $7.6 billion bailout that it will increase interest rates further if the nation’s foreign reserves drop too low.

The State Bank of Pakistan said its benchmark rate “will be raised earlier” than the monetary policy statement due at the end of January 2009 if reserves fall below an agreed monthly floor, according to the loan arrangement between the IMF and Pakistan. The Washington-based lender posted the agreement on its Web site.

Pakistan, denying blame for last week’s terrorist attacks in Mumbai, was forced to turn to the IMF for a bailout after its foreign reserves shrunk 75 percent in a year to $3.45 billion. The IMF fell short of saying when it would allow restrictions on share trading to be removed, upsetting some investors who are awaiting the implementation of a 20 billion rupee ($255 million) government fund to help lift stocks.

“The stock market should be opened to allow free movement of capital,” said Farid Khan, director of equities at Credit Suisse Pakistan Ltd. in Karachi. “Focusing on the foreign- reserve position, while important, can damage the capital market and foreign investment.”

The Karachi Stock Exchange has prohibited investors from selling shares below their Aug. 27 closing prices, after the benchmark index fell 35 percent earlier this year. Ending the ban and “the use of public funds to support the stock market will be decided after reaching understandings with Fund staff,” the IMF said.

‘Tightening’ Policies

Pakistan’s economy may expand as little as 3 percent this fiscal year in response to a “tightening” of macroeconomic policies and a deceleration of growth in the nation’s trading partners, the IMF said. That would be the slowest pace since 2000, when South Asia’s second-largest economy grew 2 percent.

In order to secure the IMF loan, Pakistan’s government and central bank have also agreed to eliminate electricity subsidies by the end of June 2009 and to continue to adjust fuel prices to reflect international prices. That should reduce the budget deficit as a proportion of gross domestic product to 3.3 percent by 2009-10 from 4.2 percent in 2008-09 and 7.4 percent this year, the IMF said.

“Many of the major targets set by the IMF, including reducing the fiscal deficit and maintaining foreign reserves will bring discipline to the government,” said Samiullah Tariq, head of research at InvestCapital & Securities Ltd. in Karachi. “The IMF conditions aim at lifting the control of the government and the central bank over the fiscal targets.”

Interest Rates

The central bank’s net foreign-asset floor for the end of December, a breach of which would trigger the commitment to increase interest rates, has been set by the IMF at $1.165 billion. The level for March 2009 has been set at $671 million.

“Interest rate policy will be sufficiently flexible to protect the reserves position and bring down inflation,” the IMF said. “The program envisages a significant tightening of monetary policy.”

Governor Shamshad Akhtar on Nov. 12 raised the central bank’s key rate by 2 percentage points to 15 percent, describing the move as “the toughest decision of my life.” Inflation accelerated to near a 30-year high in October, with consumer prices soaring 25 percent from a year earlier.

The IMF has approved more than $40 billion of loans in recent weeks to prevent the global financial crisis and recession from undermining the stability of developing nations. Ukraine, Serbia and Iceland have already got funds from the IMF. Belarus has requested $2 billion and Turkey may also agree to emergency funding.

Pakistan completed its last IMF program in 2004 with a credit rating from Standard & Poor’s of B+, four levels below investment grade. S&P cut the nation’s rating to CCC on Nov. 14, one day before the latest IMF loan was announced, citing a risk of default on external debt payments.

Source

Pakistan Obtains $7.6 Billion Bailout Loan From IMF

By Khalid Qayum

November 25 2008

Pakistan obtained a $7.6 billion bailout from the International Monetary Fund to help prevent the country defaulting on its debt.

The State Bank of Pakistan, which this month raised its benchmark interest rate to 15 percent from 13 percent, has committed as part of the aid to “further tighten monetary policy as needed,” the IMF said in a statement in Washington yesterday. South Asia’s second-largest economy will be able to immediately draw upon $3.1 billion of the loan, it said.

President Asif Ali Zardari, facing pressure from the U.S. to step up the fight against Taliban and al-Qaeda insurgents along the border with Afghanistan, needs IMF financing to prop up Pakistan’s ailing economy. The nation’s foreign-exchange reserves have shrunk 75 percent in 12 months to $3.45 billion and economic growth is forecast to slump to a seven-year low.

Pakistan’s rupee gained 0.44 percent against the dollar to a seven-week high of 78.70, as of 11:15 a.m. in Karachi. The currency has declined as much as 26 percent this year as foreign investors spooked by the global credit crunch withdraw funds from emerging markets. The yield on the benchmark 9.6 percent bond due August 2017 held at 15 percent.

The loan from the IMF “will ease constraints on foreign currencies and it will boost the confidence of overseas and domestic investors,” said Samiullah Tariq, an economist at InvestCapital & Securities Ltd. in Karachi. “Now investors know that there will be a lot more fiscal discipline.” He said he expects rupee to strengthen to 75 against the dollar in a month.

Global Recession

The IMF has approved more than $40 billion of loans in recent weeks to prevent the global financial crisis and recession from undermining the stability of developing nations. Ukraine, Serbia and Iceland have already got funds from the IMF. Belarus has requested $2 billion and Turkey may also agree to emergency funding.

“The Pakistani economy was buffeted by large shocks during fiscal year 2007 and 2008, including adverse security developments, higher oil and food import prices and the global financial turmoil,” said IMF Deputy Managing Director Takatoshi Kato. “By providing large financial support for Pakistan, the IMF is sending a strong signal to the donor community about the country’s improved macroeconomic prospects.”

Pakistan expects the IMF loan will help it win additional aid from a group of other lenders and donor nations, including the U.S., U.K., China and Saudi Arabia. The group’s Nov. 17 meeting in Abu Dhabi adopted a “work plan” for financial help to Pakistan, the Foreign Ministry has said.

‘Significant Tightening’

To secure the IMF loan, Pakistan agreed to a “significant tightening of fiscal policy” and an end to central bank financing of the government. Pakistan plans to reduce its budget deficit to 4.2 percent of gross domestic product in 2009 from 7.4 percent in the past financial year, according to the Washington-based lender.

The cost of insuring a $10 million Pakistani government bond against the risk of default has more than doubled since the end of September to $2.28 million a year from $987,000 per annum, according to CMA Datavision.

Last week Pakistan’s government said the country’s $150 billion economy was expected to expand 4.3 percent in the fiscal year ending June 2009.

Growth is easing after central bank Governor Shamshad Akhtar on Nov. 12 increased interest rates by the most in more than a decade to curb inflation, which jumped to a 30-year high of 25.33 percent in August.

Pakistan completed its last IMF program in 2004 with a credit rating from Standard & Poor’s of B+, four levels below investment grade. S&P cut the nation’s rating to CCC on Nov. 14, one day before the latest IMF loan was announced, citing a risk of default on external debt payments.

Source

Published in: on December 3, 2008 at 8:07 am  Comments Off on Pakistan Promises IMF to Raise Rates If Reserves Drop and Eliminate Electricity subsidies  
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Germany to provide a 308-million euro loan to Iceland

November 22 2008

BERLIN,

Germany said on Saturday it would provide a 308-million euro loan to Iceland’s deposit guarantee fund so it could pay back savings of German clients of Kaupthing bank, which was taken over by the Icelandic state last month.

The International Monetary Fund this week approved a $2.1 billion loan for Iceland. The loan had been held up due to a dispute between Iceland, Britain and the Netherlands over how to repay savers with deposits in frozen Icelandic accounts.

German savers also had money locked up.

German Finance Minister Peer Steinbrueck told Tagesspiegel daily the German savers would get their money back in full.

The German loan would total 308 million euros, the amount savers in Germany had held at Kaupthing

Iceland was caught in the global financial crisis as its currency plunged and its financial system crashed last month under the weight of tens of billions of dollars of foreign debts incurred by its banks, three of which failed.

Britain, the Netherlands and Germany issued a statement last week saying they would provide “pre-financing” to help Iceland meet foreign deposit obligations. The IMF, in a conference call on Thursday, estimated those obligations at $5-6 billion.

A British finance ministry source said Britain would lend Iceland 2.2 billion pounds ($3.27 billion). The Netherlands said it was working on aid to help cover 1.2 billion ($2.63 billion) to 1.3 billion euros of Dutch deposits held in Icelandic accounts.

Kaupthing said last week it hoped to pay back customers of German operations in the next few days or weeks.

Germany’s financial watchdog BaFin has implemented a temporary moratorium for the German unit of Kaupthing and the bank said it had been working on an agreement with the German government in recent weeks.

(Reporting by Andreas Moeser; Writing by Kerstin Gehmlich)

Source

BREAKING NEWS: Iceland IMF loan approved

Iceland’s Economic Meltdown is a big Flashing Warning Sign

Published in: on November 23, 2008 at 6:47 am  Comments Off on Germany to provide a 308-million euro loan to Iceland  
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Oil-rich Angola is in line for a one-billion-dollar World Bank Loan

November 20 2008

LUANDA (AFP) — Oil-rich Angola is in line for a one-billion-dollar credit from a World Bank organ that aims to reduce poverty and create jobs, a bank official said Wednesday.

Senior World Bank economist Ricardo Gazel told AFP that Angola was applying to join the International Bank for Reconstruction and Development (IBRD), which serves middle-income and credit-worthy poor countries.

“Angola is hoping to join the IBRD, which means they will have access to a one billion dollar credit over four years, which would be 250 million dollars a year,” Gazel said.

Since Angola joined the World Bank in 1989, the former Portuguese colony has received 677 million dollars in credits and grants.

After nearly three decades of civil war ended in 2002, Angola began looking for financing from countries around the world to begin rebuilding its shattered infrastructure.

Angola also expanded operations in its vast oil fields to rival Nigeria as Africa’s top producer.

Economic growth — at just 3.3 percent in 2003 — is set to top 20 percent this year, but nearly 80 percent of the country still lives on less than two dollars a day.

China’s government opened a 4.5 billion dollar line of credit to Angola in 2004, while the China International Fund (CIF) has opened 2.9 billion dollars worth of loans.

European donors have also developed an interest in Angola, with Spain last year promising 600 million dollars in reconstruction aid.

Source

European donors have also developed an interest in Angola, with Spain last year promising 600 million dollars in reconstruction aid.

I bet they are interested. More like they want the Oil.

Published in: on November 21, 2008 at 9:42 am  Comments Off on Oil-rich Angola is in line for a one-billion-dollar World Bank Loan  
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World Bank Promotes Fossil Fuel Pollution

One thing leads to another and yet another. One story can lead to some valuable information.

Anyone who has been reading “Did You Know” has noticed there are many things on the IMF and the World Bank. Their policies have contributed to Social problems and Corporations being allowed to go into countries and do some rather devastating damage, to countries who receive the loans.

Monsanto has devastated Indian cotton farmers for example. Of course they have also been involved in many other  problems as well.

There are other corporations that are equally as bad but, for the moment I will just use them as an example.

The World Bank and IMF in many cases, as a part of the agreement to get a loan,  stipulate the markets in the recipient country must open their markets up to some of these not so wonderful corporations, among other stipulations which can vary from one recipient country to another.

In Iceland they had to raise their interest rates to 18%. Of course this I found rather odd, considering during the Financial Crisis of late every other country is lowering them.

After reading the story below I of course went for a wander and found a few things.

So I am sharing my findings with you.

I love to share especially when it comes our planet and our environment.
Time to see green in the red
By James Blunt
November 17, 2008

This year, I have visited more than 180 cities on my world tour, and wherever I went — from Aberdeen to Auckland — one thing never failed to amaze me: air conditioning. It was blasting at sub-arctic levels in nearly every hotel I stayed, when most times it would have been just as easy — and better for the environment — to open a window.

To me, hotel air conditioning is a small but telling reminder of the luxuries we have grown so accustomed to in an age of prosperity but could often do without. They are things — like SUVs, or fish caught half a world away or even disposable hand wipes — that barely improve our daily lives but, altogether, are taking a terrible toll on our planet.

So, as we read  in newspapers like Metro about the economic slowdown, I wonder if there might be a silver lining in such grim news: The possibility that after a period of so much consumption, we might cut back a bit on extravagances we don’t need, and give our over-worked planet a bit of a breather?

I realize that many people roll their eyes when a celebrity preaches about the environment — or rescuing baby seals, or any other worthy cause. (I don’t like preaching, either, and — contrary to what you might have read in the tabloids — I don’t think of myself as a celebrity).
As an army officer and a musician, I have had the privilege of seeing some of the planet’s natural treasures. Sadly, I have also seen the way that we abuse it by dropping bombs and building shopping malls.

I don’t pretend to be an environmental expert, but I am learning. Before my concerts, we screen a preview of An Inconvenient Truth, the remarkable documentary by former U.S. vice-president Al Gore

I am installing solar panels at home, and for every ticket to one of my concerts sold online, we plant a tree.

I’m a supporter of The Big Ask.

It is a campaign by Friends of the Earth to get govern­ments to reduce carbon dioxide emissions — the main cause of global warming. Thanks to them, the European Union is now debating laws that would force members to cut emissions by 20 per cent by 2020. If approved, it would be the most ambitious plan in the world, and just might convince the U.S., China and others to come aboard.

Unfortunately, some politicians are pointing to the economy and saying that now is not the time to fight global warming. I think they have it backwards: We cannot afford to wait any longer. Global warming is a problem that is only going to get worse, and more costly to fix, the longer we delay. By joining The Big Ask, you can remind our leaders that the environment should not depend on the stock market.

And one more thing: next time you switch on the air conditioning, think about cracking a window open instead.

Source


Well I had to go and see what the “The Big Ask” was all about. Curiosity you know.

Seems the Friends of the Earth do numerous things.
Fuel Poverty being one of them.
November 13

Friends of the Earth and Help the Aged have lodged an appeal today (13 November 2008) against last month’s High Court ruling that the Government has not broken the law over its failure to tackle fuel poverty.

The High Court gave Friends of the Earth and Help the Aged permission to appeal because the case raised difficult and novel legal questions.  The organisations have asked the Court of Appeal to reconsider the issues and order that the Government release previously secret fuel poverty documents.
Friends of the Earth’s executive director, Andy Atkins, said:

“We believe the Government has acted unlawfully by failing in its legal commitment to end the suffering of fuel poverty. The Government must introduce a massive programme to cut energy waste, slash fuel bills and ensure that people heat their homes and not the planet.”

Mervyn Kohler, Special Adviser for Help the Aged, said:

“The intention of Parliament to end fuel poverty was very clear in legislation – it must happen.  The Government has to come up with a fresh fuel poverty strategy immediately to end the suffering of millions of vulnerable people.  Low income households need crisis payments simply to get through the coming winter, but in the longer term, the energy efficiency of our homes must be improved.”

Although the Government is legally bound to do all that is reasonably possible to eradicate fuel poverty for vulnerable households by 2010 and for all households by 2016, five million households in the United Kingdom will struggle to heat and power their homes this winter. The number of households in fuel poverty has now reached the highest level in ten years.
Help the Aged and Friends of the Earth and are calling on the Government to develop a far more effective and comprehensive programme of domestic energy efficiency to simultaneously end suffering from fuel poverty and tackle climate change.

Unfortunately this problem is not limited to just the UK.  It is a problem in many other countries as well.

This I found to very interesting.

Brown urged to U-turn on $1.6bn contribution to disastrous climate funds

April 11 2008

Civil society groups from around the world are today (Friday 11 April 2008) calling on the World Bank to withdraw its proposal to establish climate investment funds ahead of this weekend’s spring meetings in Washington, due to concerns the fund will be used for carbon offsetting schemes including industrial-scale tree plantations, coal projects and other polluting, energy-intensive industries and could undermine international efforts to tackle climate change.

The World Bank this week detailed its plans for the funds, which are being set up outside the United Nations Frame Convention on Climate Change [1] and into which the UK will channel its $1.6 billion Environmental Transformation Fund.

Friends of the Earth International climate campaigner Joseph Zacune said: “Gordon Brown’s decision to spend hundreds of millions of taxpayers’ money on the World Bank’s disastrous climate funds is set to do much more harm than good by undermining UN, developing country and community-based efforts to address climate change.

“The World Bank is responsible for major emissions through its financing of dirty fuel projects around the world – putting it in charge of multi-billion dollar climate funds is like putting a mafia don in charge of law and order.”

The World Bank Group is the largest multilateral lender for fossil fuel projects, spending around $1 billion per year in financing for the oil and gas industry. This week the Bank approved a $450 million loan for the 4,000 megawatt Tata Mundra coal project in Gujarat, India which is expected to emit 23 million tons of carbon dioxide per year.

The World Bank’s climate investment funds are expected to be worth between $7 and $12 billion. The US, UK, and Japan originally proposed the funds with a view toward their approval at the G8 summit in Japan in July 2008.

The Bank’s funds are also earmarked for tropical rainforest countries taking part in the Forest Carbon Partnership Facility. This global offsetting scheme would allow rich countries and their corporations to buy up carbon locked in developing country forests in order to pollute as usual at home. The proposals have been opposed by Indigenous Peoples who would have their land rights undermined.

The Group of 77 and China criticised the proposed funds at UN climate talks in Bangkok last week.

The World Bank’s own Extractive Industries Review (EIR) in 2004 recommended that the Bank “phase out investments in oil production by 2008”.

Notes

[1] Details on these new climate funds became available this week on the World’s Bank website

[2] Bernaditas Muller, chief negotiator for the Group of 77 and China, stated, “The governance of these funds is also donor-driven. There is clearly money for climate actions, which is the good news, but the bad news is it is in the hands of institutions that do not necessarily serve the objectives of the Convention.”

[3] A new report “World Bank: Climate Profiteer” from the Institute for Policy Studies, shows how the World Bank’s growing engagement in carbon markets is dangerously counter-productive. The Bank’s $2 billion, and growing, carbon finance portfolio is forging a path through the $60 billion international carbon market toward a dirty energy future. While the World Bank continues to fund greenhouse gas-emitting coal, oil and gas projects, it skims an average 13% off the top of carbon deals. The report is available on the IPS website

(There are a number of reports at the IPS website , about the World bank worth reading. ( Challenging Corporate Investor Rule ) is one of them. There are about 5 or 6  reports on the World Bank . They do help pollution increase. There are other reports on pollution like (Radiation) as well.

Do be sure to check it out. There is a wealth of information there.

[4] More information is available including Third World Network’s critique on these funds.

See also Bretton Woods Project “World Bank climate funds: a huge leap backwards” .

Source

The Environment belongs to all of us and we must protect it.

Then we also have this type of pollution as well. War “Pollution” Equals Millions of Deaths

Icelanders Take to Streets to Protest Government’s IMF Loan Failure

By Tasneem Brogger and Helga Kristin Einarsdottir

November  14 2008

Icelanders will take to the streets in their thousands tomorrow to protest the government’s failure to clinch a $6 billion International Monetary Fund-led loan while countries in less dire economic straits jump the IMF queue.

Weekly protests in downtown Reykjavik may swell to 20,000 soon, or 6 percent of the population, said Andres Magnusson, chief executive of the Icelandic Federation of Trade and Services. The islanders are venting their anger on politicians as prices soar, the krona collapses and the economy goes into reverse.

“Enormous mistakes were made, but those who made them are still in the same place,” said Hildigunnur Runarsdottir, a music composer who has attended five protests since the country’s banking system collapsed last month. “They don’t seem to be doing anything at all about the situation.”

The Atlantic island, which had the fifth-highest per capita income in the world last year, needs the money to finance imports and revive the banking system. Central bank forecasts that the economy will contract 8.3 percent next year may prove optimistic if the loan isn’t approved soon, said Lars Christensen, chief analyst at Danske Bank A/S in Copenhagen.

This “isn’t sustainable,” Christensen said. “You can’t starve the economy, and that’s what the government’s doing at the moment. Every day that passes makes the economic outlook worse.”

`Depressed’

Many retailers are relying on credit from their suppliers to keep their shops stocked.

“I have a long-standing relationship with suppliers, who have given me 30-60 days credit,” said Gudrun Steingrimsdottir, who runs a lingerie store in central Reykjavik. “If the situation persists another month, I don’t know what is going to happen.”

Trouble is, neither does anyone else.

“The main thing that is creating unrest is that the government doesn’t come forward and inform the public what is on the agenda,” Magnussen said. “Nobody can get any information.”

As the currency fell and imports shrank, the inflation rate reached an 18-year high of 15.9 percent in October. Delays in sealing a loan package mean the central bank can’t return the currency to free float. The bank now holds daily krona auctions, with the currency trading for 178 against the euro on Nov. 12, compared with about 90 kronur per euro at the start of the year. The traded volume at that auction was 13.8 million euros.

“What I notice is how depressed people have become,” said Steingrimsdottir. “We know nothing. People seem to have lost all hope.”

IMF Rescue

The IMF is withholding approval of its $2.1 billion loan until other lenders agree to fulfill their commitments to a wider bailout, Fund spokesman Bill Murray said on Nov. 11.

Norway has pledged 500 million euros ($635 million), the Faroe Islands 300 million kronor ($50 million) and Poland $200 million. That leaves Iceland well short of the $6 billion it says it needs.

Complicating talks are U.K. and Dutch demands that the government repay depositors at the Internet unit of Iceland’s collapsed Landsbanki Island hf. Those debts may amount to as much as 5.5 billion pounds ($8.2 billion), the size of Iceland’s economy, according to a report by Jon Danielsson, an economist at the London School of Economics.

“By comparison, the total amount of reparations payments demanded of Germany following World War I was around 85 percent of GDP,” Danielsson said.

Iceland’s government has accepted it will have to reach a negotiated solution to the dispute with the U.K. and the Netherlands to get the IMF loan, the newspaper Morgunbladid said yesterday, without saying where it got the information.

Envy

Icelanders are shooting envious glances at Eastern Europe where Hungary and Ukraine received loans from the IMF within two weeks of asking. Iceland has little to show for its efforts, six weeks after its banking system started to collapse.

“It’s worrying enough that they’re not getting the $6 billion they’re talking about, but the fact they’re not even getting the $2 billion is very worrying,” Christensen said. “It’s amazing that Ukraine is able to get a $16 billion loan, one of the most corrupt countries in the world, and Iceland is not able to pull it off.”

Ukraine had its $16.4 billion loan from the IMF approved on Nov. 6. Hungary said on Nov. 11 it’s already drawn on the first 4.9 billion euro ($6.16 billion) tranche of its IMF-led 20 billion-euro loan.

While the IMF loans to Hungary and Ukraine make up less than 20 percent of those countries’ gross domestic products, Iceland needs loans worth more than its entire GDP to repay debts built up through five years of economic boom.

“We should have turned the music down when the party got out of hand,” Runarsdottir said.

Source

Bottom line, it all started in the US.

Iceland has be hit extremely hard and things don’t seem to be improving.

Protests against Crisis in Iceland Get out of Hand
November 10 2008

People ganged up on police during the latest in a series of protests outside Iceland’s Althingi parliament in central Reykjavík on Saturday. Police were having problems with keeping the situation under control and one man was arrested.

From the protests on Saturday, November 8. Copyright: Icelandic Photo Agency.

Demonstrators were demanding actions to improve the economic situation, Fréttabladid reports.

“There is nothing wrong with people protesting in a democratic society but one also has to differentiate between legal peaceful demonstrations and riots,” Prime Minister Geir H. Haarde told Morgunbladid. “A demonstration is in real danger of becoming a riot when the parliament building is pelted with stones.”

Among actions undertaken by protestors was raising the Bónus supermarket-chain flag (a pink piggybank on a yellow background), from the parliament building roof.

Haarde said his government was trying to inform the public on the status of the situation as quickly as possible—lack of information is one of the issues angering demonstrators—with regular press conferences, via the websites of the ministries and elsewhere.

“People who ask for information should be able to receive it,” Haarde stated.

Source

More on Protests

One problem leads to yet another.

Iceland Cuts Funds to Foreign Aid

Iceland’s Foreign Minister Ingibjörg Sólrún Gísladóttir presented yesterday a strategy for limiting expenses at her ministry in light of the economic depression, including cutting funds to development assistance.

Well you do what you have to do.

By Alex Elliott
November 13 2008

Ingibjorg Solrun Gisladottir, Icelandic Foreign Minister, says she is hopeful the negotiations currently underway in Brussels to work out a satisfactory settlement with the British and Dutch governments over Icesave compensation can be completed tonight or tomorrow, MBL.is reports.

Stod 2 television news reported this evening that the Icelandic delegation has adjourned the meeting until midnight, when their conclusions may be delivered. According to sources, the British government is reported to be demanding the equivalent of ISK 600 billion (USD 4.7 billion) to pay British Icesave customers up to the EUR 20,000 state guarantee. If an agreement is reached, it is thought Iceland will be free to take control of Landsbanki’s UK assets and sell them – generating crucial revenue. The burden on the Icelandic tax payer will likely be less than feared.

The Foreign Minister said in an interview with the Icelandic state broadcaster RÚV, that the government has received a very clear message on just how important it is to resolve the Icesave issue with the Dutch and British. It is important for the entire European economy. A lot is at stake if the issue is not successfully resolved very soon, she said.

Source

Published in: on November 14, 2008 at 6:02 am  Comments Off on Icelanders Take to Streets to Protest Government’s IMF Loan Failure  
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World Bank offers Nigeria fresh $3bn loan

By Everest Amaefule, Abuja

Nov 10 2008

The World Bank has offered Nigeria the opportunity of a fresh loan of $3bn to improve on its infrastructure.

The window of opportunity is open between 2009 and 2011, according to a senior official of the bank, Mr. Simeon Ehui, who spoke when a group of foreign journalists and alumni of the International Institute of Journalism, led by Head of the institute, Mr. Astrid Kohl, visited the bank on Saturday.

Ehui, who represented the Country Director of the bank, Mr. Onno Ruhl, said the country was eligible to get $3bn to support development projects and eradicate poverty as a result of improvement in the economy.

The meeting was also attended by the Chief Economist of the World Bank Office in Nigeria, Mr. Volker Treichel, and Senior Communications Officer, Mr. Obadiah Tomohdet.

According to Ehui, “The $3bn for three years is a concessionary loan with zero interest rate. It will not add any burden to Nigeria. The loan has been offered to Nigeria because of the massive improvement in the economy.

“As at 1994, there was no commitment by the bank in Nigeria. But the World Bank’s commitment in Nigeria has grown since 1999 to $2.2bn in 2006 and over $2.5bn currently. The improvement in the bank’s commitment in Nigeria over the years is not by chance. It is as a result of improved governance and economic performance.”

The senior bank official explained that the loan was tied to several developmental projects, including education, health, roads, and agriculture, adding that it was an International Development Association concessionary loan with no interest rate apart from administrative charges.

He also noted that Africa now had an additional seat on the World Bank board but added that the country or region that would take the slot was being finalised.

Speaking at the event, the World Bank chief economist said Nigeria’s double-digit growth target was realisable, but urged the Federal Government to address the power problem in the country.

Meanwhile, the bank in its “World Development Report 2009: Reshaping Economic Geography”, released on Friday, said policies that facilitated geographic concentration and economic integration, both within and across countries, as well as within the global economy, would promote long-term growth in Africa.

According to the Director of the report, Mr. Indemit Gill, growth does not come to every place at once, with markets favouring some places over others.

To encourage prosperity, he said, governments should facilitate the geographic concentration of production, rather than fight it. But they must also institute policies that would make the provision of basic needs – schools, security, streets, and sanitation – more universal, he added.

The report noted that sub-Saharan Africa today faced the triple challenges of low density or scarce and scattered populations; long distances between remote areas and centres of economic activity; and deep divisions in national, religious, and ethnic terms.

Source

Published in: on November 10, 2008 at 7:55 am  Comments Off on World Bank offers Nigeria fresh $3bn loan  
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In Pakistan -Sherpao seeks parliamentary debate on IMF loan issue

November 10 2008

PESHAWAR: Pakistan People’s Party-Sherpao (PPP-S) Chairman Aftab Ahmed Khan Sherpao said on Sunday that International Monetary Fund (IMF) loan issue should be debated at length in Parliament before taking loan from the IMF.

Addressing a press conference at his Peshawar residence after a party meeting, Sherpao said that economic crisis had further worsened due to deteriorating law and order situation in the country, necessitating an in-depth discussion in Parliament on the IMF loan before the government took a final decision on taking loan from the IMF.

The PPP-S leader said Pakistan should give a befitting replying to those attacking sovereignty, integrity and solidarity of the country. Sherpao demanded that 14-point resolution passed by Parliament after a joint in-camera session should be implemented.

Though the whole world is facing financial crisis, Pakistan is suffering from the worst one than other countries, Sherpao said.

He said that he was not invited to Pak-Afghan Jirga held recently in Islamabad. However, he added, such jirgas were useful for both the countries. He said more jirgas should be held to restore peace in the region.

Earlier, the PPP-S meeting condemned US missile attacks on the Pakistani territory, including Waziristan. staff report

Source

Published in: on November 10, 2008 at 5:57 am  Comments Off on In Pakistan -Sherpao seeks parliamentary debate on IMF loan issue  
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Iceland awaits IMF decision on Monday


A decision on whether or not Iceland will receive its requested loan from the IMF has been delayed again for two days. The decision is now expected on Monday.

The Icelandic PM says he is entirely confident that the USD 2.1 billion loan will be granted, and that a wider 6 billion dollar rescue package will be agreed upon as a result.

The delay is blamed on IMF coordination with the Nordic countries. Some sources claim the IMF is waiting for the Nordic countries to commit money beforehand; while others claim the Nordic countries are waiting for the IMF’s confirmation before they pledge support.

PM Geir H. Haarde believes the weekend’s hurdles will be easy to conquer – although, if true, it could potentially become a frustrating situation.

Norway and the Faroe Islands have already pledged to lend Iceland money. The final rescue deal is expected to include cash from the IMF, the Nordic bloc, the UK, Netherlands and Poland. The participation of the USA, Russia and the European Central Bank has not yet been confirmed or denied.

The Prime Minister denies credible rumours that the delay is caused by IMF unease over Iceland’s ongoing negotiations with the Netherlands and the UK over frozen savings accounts.

Source

Published in: on November 8, 2008 at 3:23 am  Comments Off on Iceland awaits IMF decision on Monday  
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Iceland to Receive Unexpected Loan from Poland

November 7 2008

Polish authorities will participate in the International Monetary Fund (IMF) economic stabilization program for Iceland, which has yet to be accepted by the IMF board, by granting Iceland a USD 200 million (EUR 155 million) loan.

This was confirmed by Magdalena Kobos, a spokesperson from the Polish Ministry of Finance, to Bloomberg news agency.

According to Bloomberg, Iceland is likely to receive an IMF-led emergency loan of around USD 6 billion (EUR 4.7 billion). In addition to Poland, the Scandinavian countries, Britain and the Netherlands will participate in granting the loan to Iceland.

According to late-breaking news from visir.is, Icelandic Prime Minister Geir H. Haarde announced at a governmental meeting this morning that he had not been made aware of Poland’s intentions to offer Iceland a USD 200 million loan.

Source

Published in: on November 8, 2008 at 3:13 am  Comments Off on Iceland to Receive Unexpected Loan from Poland  
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Orissa seeks Rs 1,250cr World Bank loan under OSEP


BS Reporter / Bhubaneswar

November 06, 2008

The Orissa government has sought Rs 1,250 crore ($250 million) loan from the World Bank under the third tranche of the Orissa Socio Economic Development Programme (OSEP).

It has already sent the proposal for loan assistance to the Government of India (GoI) to be forwarded to the World Bank for approval.

This was communicated to the visiting four member World Bank team by the state government today. During the discussion with the World bank team, the state government apprised them of various steps taken by it relating to anti-corruption measures, introduction of e-procurement system and financial management.

Talking to the media after discussion with the senior state government officials at the secretariat, VJ Ravishankar, lead economist, South Asia Poverty Reduction and Economics Management of World Bank said, the state government has sought a loan of $250 million from the World Bank under the third tranche OSEP.

The Bank will consider the request for loan after the GoI sends a letter in this matter, he added. The Orissa government availed $125 million in the first tranche and $225 million in the second tranche of OSEP.

Ernesto May, sector director, poverty reduction, economic management, finance and private sector development of the World Bank, South Asia region, said, the overall performance of the state government has been very satisfactory. The World Bank team will work together with the Orissa government to assess the overall situation, he added.

The team members later had a look at the Orissa Treasury Management System and computerisation of accounting system in the Controller of Accounts office.

Source

Published in: on November 6, 2008 at 9:17 pm  Comments Off on Orissa seeks Rs 1,250cr World Bank loan under OSEP  
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Serbia seeks new IMF deal

BELGRADE, Nov 5 2008

Serbia’s officials say they are negotiating a financial arrangement with the International Monetary Fund to help the Balkan state counter effects of the global financial crisis and bolster its credit rating.

Here are some key facts about Serbia’s arrangements with the IMF and about the country’s economy.

* The IMF mission arrived in Belgrade in late October to advise the government on its 2009 budget.

* Serbia says it will not need extra funding in the next 6-12 months, but could use an available $700 million of its IMF quota if there is a sudden halt in investment inflows.

* Worries focus on external financing for the country, which has a current account deficit of 18.5 percent of gross domestic product and saw almost 12 percent wiped off the value of its currency between the start of October and early November. A fall in the dinar’s value makes it more expensive for business and consumers to meet obligations in foreign currencies.

* Since 2000 when the West embraced Serbia after nearly a decade of isolation, the Balkan country has had two financial programmes with the IMF.

* In June 2001 the IMF approved a $249 million stand-by loan to Serbia and Montenegro, at the time the two remaining partners in their shrunken Yugoslav federation.

* In 2002 Serbia signed a three-year loan deal worth $962 million with the IMF and its completion was the main condition for the Balkan state to win an additional 15 percent debt write off — equivalent to $700 million — from the Paris Club of creditors.

* Serbia’s dinar currency, currently trades at two-year lows of 85.70-86.00 to the euro. The central bank spent 260 million euros of its more than 9.4 billion euros in hard currency reserves defending the dinar in October.

* Following reports on the financial sector crisis in the West, Serbs withdrew more than 500 million in savings deposits from banks. Serbians lost more than $4.0 billion in private savings in the early 1990s and the government is repaying the debt with a 14-year bond maturing in 2016.

* In 2007 Serbia’s economy grew by 7.5 percent. This year’s growth is seen at around 7 percent but the global credit crunch is expected to weigh on activity and the government has cut its 2009 growth forecast to four from six percent.

* Standard and Poor’s rates Serbia BB- with a negative outlook and had seen fiscal expansion as the main threat. Their representatives will visit Serbia later this week before deciding a change in credit rating or outlook. (Reporting by Ivana Sekularac, Editing by Gordana Filipovic and Patrick Graham)

Source

The IMF made Iceland raise their interest rate up to 18 per cent so they could get a loan.

I also have to wonder how much interest and other conditions are on loans, countries get from the IMF.

Anyone have a really long list?

Published in: on November 6, 2008 at 11:45 am  Comments Off on Serbia seeks new IMF deal  
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Iceland lifts interest rates to record 18% to secure IMF $2bn loan

By David Ibison in Stockholm

Published: October 29 2008

Iceland raised interest rates to a record 18 per cent from 12 per cent yesterday as a “condition of a proposed $2bn loan from the International Monetary Fund” to help rescue the stricken island.

Iceland applied to the Washington-based organisation for the emergency loan after its banking system collapsed and is seeking another $4bn (€3.2bn, £2.6bn) from some Nordic and other central banks.

The application will be presented to the IMF’s board tomorrow and the central bank said a condition attached to the loan was for a rate rise to 18 per cent.

The move reversed a 3.5 per cent rate cut announced just two weeks ago by David Oddsson, central bank governor, underlining the influence the IMF now has over policymaking in Iceland.

Brian Coulton, managing director at Fitch Ratings, the credit rating agency, said Iceland’s central bank had “no choice but to work very closely with the fund”.

Following the collapse of the banking system, the Icelandic economy is expected to contract by up to 10 per cent, unemployment to rise at about 8 per cent and inflation to hit 20 per cent or more, economists say.

“Putting up interest rates means they are going to go through the mother of all recessions, but the key is stability,” Mr Coulton said.

The IMF-led rescue represents an important breakthrough for Iceland as it strives to stabilise its economy by clearing the way for other countries to come to its aid. But it has come at the price of agreeing to the organisation’s demands.

The IMF conditions at-tached to the loan are to restore confidence in the economy and stabilise the Icelandic krona, restore fiscal sustainability, and reestablish a viable banking system. Yesterday’s rate rise was an important first step towards boosting the credibility of the Icelandic krona, which lost 70 per cent of its value during the crisis before trading dried up amid the uncertainty.

The IMF and Icelandic government have agreed that the currency should refloat within a matter of weeks, regarded as a vital step in restoring Iceland’s international credibility and helping the international payment system to restart.

“It is of overarching importance to restore stability in the foreign exchange market and support the exchange rate of the crown,” Sedlabanki, the central bank, said in a statement.

The huge interest rate rise came as Iceland continued to try to rally international sup-port for multi-billiondollar loans to bolster its foreign exchange re-serves, a move that should also help support its currency once it resumes trading.

The office of Geir Haarde, prime minister, told the Financial Times yesterday Iceland had sent an application for funds to the US Federal Reserve and the European Central Bank and had also been in contact with the Bank of Japan via its embassy in Tokyo.

The Icelandic krona is expected to be floated again as soon as is practical, possibly within the next two weeks, once the IMF’s board has approved the $2bn loan.

Source

The interest rate increase is way out of line with any logic. That is one of the reasons I don’t trust the IMF. Their Conditions. They dictate to those in need. 18% is ridiculous. This is helping Iceland how?

That kind of interest rate is insanity.

Nordic nations work on Iceland bail-out
By David Ibison in Stockholm

November 5 2008

Officials from four Nordic central banks and finance ministries held a private meeting in Stockholm on Wednesday to discuss their contributions to a $6bn rescue package for Iceland.

The gathering at the Ministry of Finance was a strong sign that Denmark, Sweden and Finland are drawing closer to announcing a multibillion euro package of loans after Norway agreed a €500m ($648m, £405m) advance last week.

Iceland hopes to be told on Thursday or Friday that its application to the International Monetary Fund for a $2bn (€1.54bn, £1.25bn) loan to support its economic revival has been approved.

Once official approval of the IMF loan has been secured, the way is clear for the Nordic countries to start considering how much they are prepared to offer, central banking officials said.

Iceland is seeking a total of about $6bn, which it will use to bolster its foreign exchange reserves to try to restore the credibility of its currency after its banking system collapsed last month.

The island’s government has also sent an application for funds to the US Federal Reserve and the European Central Bank and has been in contact with the Bank of Japan through its embassy in Tokyo, it said.

The four Nordic nations have said they are willing to support Iceland but only after it agreed to design and implement an economic stabilisation plan in association with the IMF. That plan was agreed in late October and comprises stabilising the Icelandic krona, restoring fiscal sustainability and re-establishing a viable banking system. It should also be approved by the IMF on Thursday or Friday.

The meeting at the finance ministry was attended by Ingimundur Fridriksson, one of three governors of Iceland’s central bank; Audun Gronn, the head of the international department at Norway’s central bank; Barbro Wickman-Parak, deputy governor of Sweden’s Riksbank; and similar level representatives from the central bank and finance ministries of Finland and Denmark.

Any commitment by the Nordic nations to support Iceland alongside the IMF would be an important development as the island strives to stabilise its economy. But securing approval for the loans does not mean that Iceland will have immediate access to the funds. Norway’s loan requires approval from parliament, as would others.

Following the collapse of Iceland’s banking system, its economy is expected to contract up to 10 per cent, unemployment is forecast to spike to about 8 per cent and inflation is set to reach 20 per cent or more, according to economists.

Iceland raised interest rates last week from 12 per cent to a record 18 per cent.

Source

Some European Union member states are said to be of the opinion that Iceland should not be granted a loan from the International Monetary Fund (IMF) until an agreement with Britain in regards to the deposits of Icelandic banks has been reached.

These same EU member states allegedly also believe that Iceland should not be granted a loan from the union’s emergency fund until the dispute surrounding the deposit accounts has been solved, Fréttabladid reports.

Icelandic Committee Members of Parliament of the European Free Trade Association (EFTA) Countries (CMP) said they had been given a clear message in that regard from EU officials during a meeting in Brussels earlier this week.

“I believe that extortion is involved,” said MP for the Left-Greens Árni Thór Sigurdsson, who is on the CMP. “[EU officials] said that a loan from the IMF would not happen unless we reached an agreement with Britain. They have influence in the fund and can set terms like that, which is known as extortion.”

Katrín Júlíusdóttir, an MP for the Social Democrats and chairman for the Icelandic division of the CMP, said Iceland’s representatives on the CMP had pointed out that Iceland intended to respect laws and regulations but that they disagreed with Britain on the interpretation of some legal issues.

Júlíusdóttir said Iceland’s representatives in the committee had also pointed out that there should not be a connection between international financial aid and a dispute on insurance for deposits.

British authorities have offered a loan to the Icelandic state so that Icelandic authorities can honor their obligations to Landsbanki account holders in the UK. However, a prerequisite for such a loan is an agreement with the IMF.

According to Fréttabladid, British Chancellor of the Exchequer Alistair Darling emphasized that a loan to Iceland would not be granted otherwise in an interview with the Dow Jones news agency on Monday.

Icelandic banks Landsbanki and Kaupthing, both of which have now been nationalized, accepted deposits through their subsidiaries in some European countries, primarily in the UK and the Netherlands. Landsbanki’s Icesave is an example of such a subsidiary.

Click here to read more about the potential IMF loan and here to read more about the development of the Iceland-Britain dispute.

Source


Published in: on November 6, 2008 at 10:07 am  Comments Off on Iceland lifts interest rates to record 18% to secure IMF $2bn loan  
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Norwegian loan to Iceland confirmed

By Alex Elliott

November 3 2008

Details are emerging that the anticipated Norwegian loan to Iceland will take place.

Norwegian Foreign Minister Jonas Gahr Store is in Reykjavik at the moment on an official visit. Following a meeting with Prime Minister Geir H. Haarde today, Store confirmed that a NOK 4 billion (USD 606 million) loan will be extended to Iceland.

The loan will have a maturity of up to five years and the existing currency exchange swap agreement will be extended to the end of 2009.

MBL.is also quotes Norwegian media as saying Norway has offered to mediate in the dispute between Iceland and the United Kingdom over repayments of British savers and the UK government’s controversial reaction to the Iceland crisis.

The news of the Norwegian loan comes after weeks of uncertainty over who will step in to save the Icelandic economy. Despite the IMF agreeing a loan of USD 2 billion, it still has not been officially approved by the board.

The Faroe Islands were the only country to have yet firmly granted Iceland a loan. Sources in Reykjavik hope the Norwegian loan will spur on negotiations with the other Nordic countries and Russia.

Source

Published in: on November 3, 2008 at 7:13 pm  Comments Off on Norwegian loan to Iceland confirmed  
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