Downing Street Says

» Thursday, November 20, 2008

Iceland

Asked about the reports of the UK lending money to Iceland, the PMS replied that the reality of the situation was that the 2.2 billion that was being reported was not new money that was going to Iceland, it just represented the Icelandic Government s liability to the UK. So it was money that they owed to us that had not been paid back yet, so in that sense it was described as a loan to them. The details had yet to be worked out, but as part of the IMF announcement today we had confirmed that the Icelandic Government was liable for a sum of 2.2 billion, and we would work out the time period for payment in the next few weeks. So this was money that they owed us and we were just crystallising that, and as part of the discussions around the IMF loan we would discuss a timetable for repayment.

Asked if this was a new loan, the PMS replied that this was not a new amount of money.

Asked how this tied in with the Dutch/German/UK loan that was being worked out, the PMS replied that it was best to check with the Treasury. The UK liability was 2.2 billion, but this was simply the money that they owed to us, that we effectively needed to formalise into a loan and work out a period over which that could be repaid.

Asked if this money predated the crisis in the Icelandic banking sector, the PMS replied that it was money that was owed to us as a result of the problems that arose in the Icelandic banking system.

Asked if it was the money that Local Councils had invested, the PMS replied that it was best to check with the Treasury exactly what the 2.2 billion comprised of. This was money that they owed to us that would be formalised and made part of a loan as part of the IMF agreement, and we would work out details of the repayment of the loan over the weeks ahead.

Asked if that would be with interest, the PMS replied that the time period and the terms of the repayment of the loan would be worked out in the weeks ahead.

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