Icesave in the limelight yet again
When the second review of the SBA took place in April, it was stated clearly in the staff report issued concurrent with the review that bilateral program financing from the Nordic countries has been linked to progress towards resolving the Icesave issue. In spite of this, the Nordic countries have already disbursed two instalments of the loan facility to Iceland, totalling EUR 890 million of the EUR 1,775 bn negotiated, or about half of the total amount. It will be most interesting to see whether the next tranche is paid out by the Nordic countries following the third review, as Icesave discussions are in progress even though the matter is still unresolved, and a solution could be on the horizon. It remains to be seen whether our Nordic neighbours will be satisfied with seeing discussions underway and a solution perhaps in sight. It would be most fascinating by far if the Nordic facility were disbursed without any explanation whatsoever and without a firm resolution of the dispute, as the IMF took a relatively stern tone on the issue in the staff report from April.

Once the third review is complete, another four remain, with the last scheduled for August 2011, when the programme supported by the SBA will be formally concluded.


Iceland's sovereign CDS spread dips below 300