Press Release No. 08/256

Press Release: IMF Announces Staff Level Agreement with Iceland on US$2.1 Billion Loan

October 24, 2008

Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), issued the following statement on Iceland today:

"An IMF staff mission and the Iceland authorities have today reached an ad referendum agreement on an economic program supported by an SDR 1.4 billion (about US$2.1 billion) loan under a two-year Stand-By Arrangement. Following review by Management, the agreement could be presented to the IMF Executive Board for approval in early November.  Iceland would be able to draw SDR 560 million (US$833 million) immediately after Board approval.

"Iceland has put together an ambitious economic program, which aims to restore confidence to the banking system, to stabilize the krona through strong macroeconomic policies, and to help the country achieve medium-term fiscal consolidation following the collapse of its banking system. I believe these strong policies justify the high level of access to Fund resources—equivalent to 1,190 percent of Iceland's quota in the IMF—and deserve the support of the international community.

"The authorities' program is focused on the essential upfront measures needed to restore confidence and economic and financial stability. The overarching goal is to support Iceland's effort to adjust to the economic crisis in a more orderly and less painful way," Mr. Strauss-Kahn said.