IMF First Review of Economic Recovery Programme Near Completion
The IMF Mission to Iceland under the direction of Mark Flanagan has, in co-operation with Icelandic authorities, has made considerable progress towards concluding its first review of the government’s Economic Recovery Programme underlying its Stand-by Arrangement with Iceland. The Mission has also met with members of parliament, academics, representatives of the private sector, labor organizations and other stakeholders to acquaint itself with economic developments in Iceland and the outlook for the future. According to the conditions of the Arrangement, the Fund is to assess the programme’s progress and outlook on a quarterly basis. This assessment forms the basis for loans made available to Iceland by the Fund. In addition, the assumptions of the programme are updated in light of economic developments, both in Iceland and on international markets.
The government's plan, as before, is aimed at reconstructing a banking system in coming weeks that will be able to provide effective services to Icelandic corporates and households, improving the fiscal situation so that the Treasury will be in surplus by 2013 and ensuring the stability of the ISK.
The Icelandic government will, within the next few weeks, send the IMF Executive Board a new Letter of Intent, as is done upon the conclusion of each review. This describes the government's principal tasks and plans for the coming months. It is based on the foundation laid at the beginning of the collaboration in November, cf. the original Letter of Intent and relevant documents which are available on the website www.iceland.org
The IMF Executive Board is expected to take a decision on the Letter of Intent in July, after which the Fund will disburse the second tranche of its loan to strengthen the foreign currency reserves of the Central Bank of Iceland. The total amount of the proposed IMF Stand-by Arrangement for Iceland is USD 2.1 billion. Of this amount, USD 830 million have already been made available to the Central Bank of Iceland. Once the approval of the Executive Board has been granted, the Letter of Intent, together with the staff report of the Mission, will be made public.
Reykjavík 29 May 2009