Iceland MPs back repayment deal

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MPs voted in favour of the deal to repay funds that were lost when internet bank Icesave collapsed in 2008

Iceland’s MPs have approved the repayment of £2.3 billion pounds to Britain, potentially ending a long-running saga that caused political as well as financial friction.

The so-called Icesave bill was passed through the Iceland parliament, the Althingi.

Forty-four MPs voted in favour of the deal to repay funds that were lost when internet bank Icesave collapsed in 2008. Sixteen voted against and three abstained.

The vote must now be ratified by Icelandic President Olafur Grimsson – a requirement that killed off a previous deal last year when he refused and instead sent the agreement to a national referendum, where it was rejected.

There was no immediate word from Mr Grimsson on his position but prior to the vote he suggested he was happier with the current deal, which relaxes interest rates and allows a longer time for repayment.

A petition against the bill, which calls for Mr Grimsson to again use his right of veto, has so far gathered around 33,000 signatures, 10% of the volcanic island’s population of just 320,000.

“This was a very clear result,” Prime Minister Johanna Sigurdardottir said.”I’m glad this is hopefully over.”

Finance Minister Steingrimur J Sigfusson said the vote was a “big step in the rebuilding of Iceland.”

Failure to settle the dispute has had repercussions for Iceland’s economic recovery from the devastation caused to the tiny island nation by the global financial crisis. Instalments from a 4.6 billion dollar loan from the International Monetary Fund that is linked to Iceland repaying its international debts have been delayed.

There also have been fears that Britain and the Netherlands, who are also owed billions and included in Wednesday’s deal, would block Iceland’s application to join the European Union until an Icesave agreement is signed into law.

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