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The Nordic Countries Ready to Come to Iceland’s Aid

October 28, 2008

Photo of Prime Minister Geir H. Haarde (photos@pmo.is)

Reykjavik, Iceland/Helsinki, Finland – 28 October 2008 – The Nordic countries have declared their readiness to help Iceland in battling the current financial crisis. A high-level committee will consider Iceland’s financial needs following a planned loan from the International Monetary Fund (IMF), and look into how the Nordic states could assist in cooperation with the IMF.

High-level committee to present proposals urgently At a meeting yesterday afternoon, the Nordic Prime Ministers discussed the international financial crisis and the serious situation in Iceland in particular. They agreed to establish a high-level committee to monitor implementation of the IMF’s stabilisation program and to discuss and coordinate measures to assist Iceland in recovering from the serious situation in which that country now finds itself.

Prime Minister Geir H. Haarde: “I highly value the strong support I received at the meeting yesterday in Helsinki. The Nordic working group will be instrumental in coordinating the assistance to Iceland. We will weather this crisis and emerge stronger as a nation,” said Haarde, adding that Iceland had a preliminary agreement with the International Monetary Fund last week on a loan of USD 2 billion. While emphasising that he did not want to put pressure on his colleagues, he indicated that Iceland’s financial requirements were in the region of USD 4 billion om addition to the IMF loan facility.

“Iceland is counting on its Nordic neighbours as well as other friends for help to revive the economy after the sudden failure of the country’s banks. The expressed solidarity of the Nordic countries is of extreme importance to us. I also hope that our dialogue will be the first step towards more cooperation and strengthened alliance between the Nordic countries in the face of the international financial crisis – a crisis that could threaten the stability of many more countries,” Haarde said at a meeting of the Nordic Prime Ministers in Helsinki, where talks of Ministers from Norway, Sweden, Denmark and Finland will continue today.

Statement from the Nordic Prime Ministers’ Meeting in Helsinki, October 27th (http://www.norden.org/start/start.asp): Statement following the meeting of Nordic Prime Ministers 27 October 2008

At a meeting today, the Nordic Prime Ministers discussed the international financial crisis and the serious situation in Iceland in particular. They agreed to establish a high-level committee to monitor implementation of the IMF’s stabilisation program and to discuss and coordinate measures to assist Iceland in recovering from the serious situation in which that country now finds itself.

The Prime Ministers expressed great concern about the negative effects of the financial crisis on the world economy and stressed the need for a stronger global regulatory framework for improving the functioning of the international financial markets.

“We must establish a more effective early-warning system for crises, develop oversight and supervision of the financial sector, and work to strengthen international financial institutions,” the Ministers said.

Prime Minister Geir Haarde briefed the Nordic Prime Ministers on the latest developments in Iceland. They expressed their solidarity with Iceland, saying that the other Nordic countries have a special responsibility to collectively assist a neighbouring country in crisis.

“We are highly gratified to note that Iceland has reached preliminary agreement with the IMF on a stabilisation programme. The Nordic countries will support this programme when it is discussed by the IMF Board of Governors. This agreement and ongoing close cooperation with the IMF make up an important platform for the work of stabilising the Icelandic economy,” the Prime Ministers said.

The Prime Ministers stated that the Scandinavian central banks already had agreements on credit facilities with the Icelandic Central Bank, and that the former had once again requested lending facilities with the Nordic Central Banks. They also noted that Finland functions as part of the euro area, but in cooperation with the other Nordic countries.

“This readiness, together with Iceland’s intention to seek support from other central banks as well, are important contributions toward strengthening confidence in Iceland’s ongoing efforts to adapt,” the Prime Ministers said.

“In accordance with the IMF’s conditions, we support Iceland’s efforts to restructure its economy and return to a path of sustainable growth through substantial financial sector adjustment, a commitment to sustainable development of foreign debt, and credible long-term financial policy. To this end, a comprehensive framework for medium-term economic policy should be established.”

For more information: Greta Ingthorsdottir, Political Advisor to the Prime Minister, e-mail: press@pmo.is. For more facts and information from the Government, please visit www.government.is

Urdur Gunnarsdottir, Press Officer, e-mail: press@mfa.is. For more facts and information from the Government, please visit www.government.is and http://www.presspodium.com/info.jsp.

Note to editors:

Additional press and media service: To ensure transparency and satisfactory media service, a press office function has been established as part of the effort outlined above. The aim will be to ensure continued service to the domestic and international press. The mail address to the projects going forward will be: press@pmo.is for press photos: photos@pmo.is. For more facts and information from the Government, please visit www.government.is and http://www.presspodium.com/info.jsp.

Background on Prime Minister Geir H. Haarde For more facts about Geir H. Haarde, please see: http://eng.forsaetisraduneyti.is/minister/cv

Background about Iceland For more background and facts about Iceland – please visit www.government.is and www.icetourist.is/displayer.asp?cat_id=269. For general information about Iceland, please contact the Iceland Chamber of Commerce, www.vi.is. The contact person is Finnur Oddson, Managing Director, e-mail: finnur@vi.is.

Iceland in brief: Iceland is an island of 103.000 km2 (39,756 sq.miles), with only 313.000 inhabitants, is about one-third larger than Scotland or Ireland. Its highest peak, Hvannadalshnjukur, rises to 2.119 m and over 11 per cent of the country is covered by glaciers, including Vatnajoekull, the largest in Europe. Energy: Situated on the Mid-Atlantic Ridge, Iceland is a hot spot of volcanic and geothermal activity: 30 post-glacial volcanoes have erupted in the past two centuries, and natural hot water supplies much of the population with cheap, pollution-free heating. Rivers, too, are harnessed to provide inexpensive hydroelectric power. People: Of the 313.000 citizen, more than half live in the capital Reykjavik and its neighbouring towns in the southwest. Keflavik International Airport is located about 50 km from the capital. Language: Iceland was settled by Nordic people in the 9th century – tradition says that the first permanent settler was Ingolfur Arnarson, a Norwegian Viking who made his home where Reykjavik now stands. The Icelanders still speak the language of the Vikings, although modern Icelandic has undergone changes of pronunciation and, of course, of vocabulary! Iceland is alone in upholding another Norse tradition, i.e. the custom of using patronymics rather than surnames; and Icelander’s Christian name is followed by his or her father’s name and the suffix -son or – dottir, e.g. Guthrun Petursdottir (Guthrun, daughter of Petur). Members of a family can therefore have many different “surnames”, which sometimes causes confusion to foreigners! History: In 930, the Icelandic settlers founded one of the world’s first republican governments; the Old Commonwealth Age, described in the classic Icelandic Sagas, lasted until 1262, when Iceland lost its independence, and in 1944 the present republic was founded. The country is governed by the Althing (parliament), whose 63 members are elected every four years. Four-yearly elections are also held for the presidency; President Olafur Ragnar Grimsson was elected in June 1996 to succeed Vigdis Finnbogadottir, and was re-elected in June 2000. The head of state plays no part in day-to-day politics. Economy: Iceland has all the characteristics of a modern welfare state. National income per capita was somewhat above the EU average in 2007. Iceland has largely built on its comparative advantages in abundant marine and energy resources although the main driver of economic growth recently has been services with two-thirds of the working population employed in the service sector, both public and private. Fish and other marine products were the mainstay of an export oriented economy until early 2008, when exports of aluminium smelting products emerged as the largest single export product accounting for 40% of total export revenue. Export of services such as tourism have also been growing and account for almost one-fifth of total export revenue. Iceland is a member of the European Free Trade Association (EFTA) and the European Economic Area (EEC). Health: Life expectancy, at 81.3 years for women and 76.4 for men, is one of the highest in the world, and a comprehensive state health-care system aims to keep it that way.

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 Contact: Iceland Chamber of Commerce www.vi.is Finnur Oddson Managing Director e-mail: Email Contact

SOURCE: Government of Iceland