Iceland parliament’s has approved paying nearly 4 billion euros ($A6.
42 billion) to Britain and the Netherlands, which had compensated more than 320,000 of their savers in a failed Icelandic bank.
Although the measure has stirred up resentment among many ordinary Icelanders hard hit by their country’s financial meltdown in 2008, lawmakers approved the measure by a vote of 33 to 30 as the issue had become a major obstacle in the small Atlantic island nation’s bid to join the European Union.
“Congratulations Iceland” shouted a lawmaker from the governing centre-left coalition, while an opposition lawmaker cried out “treason”.
The measure approves the payout of 3.8 billion euros ($A6.1 billion) to the British and Dutch governments, which had partially compensated their savers who lost money in the collapse of the Icesave online bank.
Icesave, an online subsidiary of the Landsbanki bank that had to be rescued in October 2008 as the global credit crunch hit, had attracted savers due to its high interest rates.
The British and Dutch governments turned to Reykjavik for the money to be returned, and an initial compensation deal was approved by Iceland’s parliament in August.
But amendments negotiated by Social Democratic Prime Minister Johanna Sigurdardottir in order to get the deal through parliament were rejected by Britain and the Netherlands, forcing a new vote.
The measure adopted on Wednesday foresees the staggering through 2024 the payment of the 3.8 billion euros, which is equivalent to nearly 40 per cent of the country’s annual gross domestic product.
A poll taken in August suggested nearly 70 per cent of Icelanders were against the Icesave deal, the compensation amounting to about 12,000 euros ($A19,261) for each citizen on the island nation of 320,000 people.
On December 14, the IMF announced it had reached an agreement with Iceland on the release of a third tranche of a $US2.1 billion ($A2.35 billion) standby loan arranged in November 2008 following the collapse of Icelandic banks.