Russia asks Iceland for details of bank rescue plan before giving loan

October 18, 2008

Russia has requested Iceland give them more details of the island nation's plan to rescue the banking sector and thus the entire national economy before granting them a loan.

Two weeks ago, Iceland's banking sector collapsed and was largely nationalised. Icelandic banks are in significantly more debt than the country can afford, and the nation may seek assistance from the International Monetary Fund. A decision on whether to involve the IMF is due within a week.

As for Russia, a senior Russian government source is reported by Reuters as having said "At the current moment, we do not yet have enough reasons to give them credit. We did not refuse. We are continuing the talks." Forbes quoted him as having also said "'We asked them to collect more information and present a rescue plan for the banking system."

Meanwhile, there is some optimism in Iceland over the economy. It is hoped by authorities that the lower exchange rate for the króna means that more tourists will be attracted. Bars and restaurants are also doing well. The manager of one bar explained: "Actually, when people get depressed they drink more."