Icelandic interest rate negotiations underway with UK and Netherlands

Iceland has received a compensation proposal from the UK and the Netherlands over the collapsed Icesave bank which  would significantly slash Reykjavik's repayment burden.

Britain and the Netherlands are requesting the reimbursement of billions of Euros from Reykjavik for compensating 320,000 British and Dutch savers who lost their money in the collapse of the online Icesave bank. The revised British and Dutch proposal would make interest rates on the repayment variable rather than fixed at the 5.5% rate set when the $5.3 billion loan agreement was made in October.

"The proposal includes lowering to a huge extent the repayment burden for Iceland," said Icelandic Prime Minister Johanna Sigurdardotti. "We would not be negotiating like we are doing unless it meant lowering Iceland's cost.”

The Icelandic government has been negotiating with the UK and the Netherlands in a bid to avoid putting the divisive Icesave issue to a referendum on 6th March. "There is an obvious will among government in the UK and The Netherlands to get an agreement with the Icelandic government," said Finance Minister Steingrimur J. Sigfusson. "I'm optimistic. Our committee has been doing a good job."

Asked if he thought a agreement could be reached with Britain and the Netherlands before the referendum, Sigfusson said, "Yes. of course it would be best if the negotiations were finished before the referendum. It would be disastrous if the negotiations would end up without a solution," he added.