A narrow majority of Icelandic MPs are opposed to paying back a €1.3bn loan made by the Netherlands to allow Iceland to compensate Dutch savers for their losses in internet bank Icesave, the Volkskrant reports on Tuesday.
The compensation agreement, worked out between the Dutch and Icelandic governments, included a commitment from Iceland to pay savers up to €20,887. The Netherlands guaranteed the rest, up to a maximum of €100,000.
Because of the financial crisis, the Netherlands lent Iceland €1.3bn to make the payments. The money was to be paid back over 15 years, with interest. A similar deal was struck with Britain, which advanced Iceland €2.7bn.
But now the Icelandic parliament is threatening to block the deal. While savers will not be affected – they have already had their money – the Dutch and British treasuries may lose out.
Opposition MPs are opposed to the deal, saying Landsbanki fell because of British and Dutch actions. But three members of the country’s governing left-wing green party are also against, and they hold the key to the vote, the Volkskrant says.
‘I was elected as an economist. We might want this deal, but Iceland cannot afford it,’ MP ilja Mosesdottir told the paper.
The Dutch finance ministry refused to comment.
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