IMF disburses $168 million to Iceland after review

posted: 28 DAYS 16 HOURS AGO

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REYKJAVIK, Iceland -Iceland's government said Wednesday that the International Monetary Fund has agreed to release $167.5 million to help support the North Atlantic nation's struggling economy.

The IMF had been putting off a decision on whether to release the second tranche of its $2.1 billion loan since the first quarter of this year.

The decision was reportedly delayed by wrangling between Iceland, Britain and the Netherlands over how to repay foreign depositors whose savings were threatened by the implosion of Iceland's financial system last year.

With that dispute settled, officials hope the new IMF cash can help restore confidence in the country's battered economy.

Iceland was an early victim of the credit crunch, which sent its debt-fueled economy into free fall. Growth dropped dramatically and unemployment shot up.

The value of Iceland's currency, the krona, has collapsed to such an extent that the country's three McDonald's restaurants are due to close next weekend because it has become too expensive to import needed ingredients.

Johanna Sigurdardottir, who became Iceland's prime minister after the previous government resigned in January, called the IMF's decision a watershed and said the move would help strengthen the country's currency reserves.

She said she expected the next IMF review, scheduled for December, to go on without a hitch.

2009-10-28 16:06:31