Dutch and British block IMF loan to Iceland

A woman leaves a branch of Iceland's second largest bank, Landsbanki, on October 8, 2008 in Rejkjavik, a day after the Icelandic state officially announced it had nationalised it.
By Cees Banning in Rotterdam and Jan Gerritsen in Reykjavik

Dutch finance minister Wouter Bos and his British colleague Alistair Darling are blocking a loan from the International Monetary Fund (IMF) to Iceland until it agrees to pay back citizens the money they deposited with the bankrupt Icelandic bank Icesave.

The Dutch finance ministry declined to comment on the claims, which were made by Icelandic members of parliament, because of on-going negotiations on a payback scheme.

About two billion euros from the Netherlands was put into accounts at Icesave's parent company Landsbanki. Of this, 1.6 billion euros came from private citizens. The British government has set aside about one billion euros for the 230,000 British citizens who have lost their savings as a result of the collapse of Icesave.

Iceland's prime minister Geir Haarde on Thursday said that the IMF loan and the finding of a solution to reimburse Icesave clients "are two separate things" and that they should not be linked.

The blockade came to light when members of the Icelandic parliament attending a meeting in Brussels heard that European Union countries on the IMF board would not approve the loan until the issue of reimbursements to Icesave customers was solved.

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