Norway offers 500m euro loan to Iceland

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Norway has offered to loan €500 million to cash-strapped neighbours Iceland in a bid to stabilise the unsettled Scandinavian economy.

Iceland, whose domestic finances are in meltdown as one of the first major casualties of the global economic crisis, is in need of outside help as its banks struggle to stay afloat.

And help appears to be arriving in the shape of Norway, with the country's finance ministry and central bank releasing separate statements confirming the five-year loan.

Norway have also unveiled plans to extend an existing forex swap agreement until the end of next year.

"We want to show our support for the international initiative and we will be providing support to Iceland in the near future," said Norwegian foreign minister Jonas Gahr Stoere, who met Icelandic prime minister Geir Haarde in Rekyavic.

Iceland's government have also reached a provisional agreement with the International Monetary Fund for a $2 billion loan, although it is yet to be approved by the fund's board.
© Adfero Ltd
03 November 2008 20:27 GMT

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