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Archive for Saturday, October 25, 2008

Iceland to receive $2 billion IMF loan

October 25, 2008

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— Iceland reached tentative agreement Friday with the International Monetary Fund for a $2 billion loan over two years, an aid package that comes after the country's banking system collapsed amid the global credit crunch.

The government said the deal, which still must be approved by the IMF's board in Washington, will also give Iceland immediate access to $830 million to head off the financial threat to the entire economy.

The country's currency, the krona, has lost half its value since January and banking transactions to and from the island nation in the middle of the North Atlantic have seized up, leaving its population of 320,000 virtually stranded.

"This program will enable us to secure funding and gain access to the necessary technical expertise required to stabilize the Icelandic krona and to provide support for the development of a healthier financial system," Prime Minister Geir H. Haarde said in a statement.

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