Iceland's Parliament passes Icesave legislation to repay debts to the UK and the Netherlands

Iceland's Parliament passes Icesave legislation to repay debts to the UK and the Netherlands

2011-02-17 02:14:59 GMT+7 (ICT)

REYKJAVIK, ICELAND (BNO NEWS) -- The Icelandic Parliament (Althing) on Wednesday passed the Icesave legislation to repay the UK and the Netherlands 4 billion Euros ($5.4 billion), the Iceland Review reported.

The new Icesave legislation was approved after receiving 44 votes in favor and 16 against. Three lawmakers abstained in the voting. Members of the Parliament (MPs) also rejected a national referendum for amendments to the legislation.

The bill will allocate money for repaying the British and Dutch governments for reimbursing 400,000 citizens following the 2008 collapse of the Landsbanki bank, Icesave's parent.

Iceland's President Ólafur Ragnar Grímsson has to approve the legislation in the coming days. The Icelandic leader rejected the last repayment proposal backed by the Parliament.

Representatives of the Independence Party, the largest opposition party, backed the legislation, while the Progressive Party and The Movement party opposed it. The discussion on the bill began on Tuesday afternoon.

Under the new Icesave deal, Iceland will repay the loan to the UK at a 3.3 percent interest between 2016 and 2046. The original bill proposed paying the money at a 5.5 percent interest rate between 2016 and 2024.

In October 2008, three Icelandic banks collapsed causing thousands of citizens to lose all their savings. In 2009, Iceland, the Netherlands and the UK agreed on a loans deal to restore the financial system.

The combined loans from the UK and the Netherlands were the single largest financial commitment ever undertaken by Iceland. The banks collapse was labeled as the largest financial and economic issues ever faced by the European island-nation.

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