UK News
Iceland to hold April referendum on overseas bank compensation plan
Feb 25, 2011, 14:54 GMT
Reykjavik - The Icelandic government announced on Friday that it will hold a referendum on April 9 so voters can weigh in on a revised plan to compensate Britain and the Netherlands over the collapse of an Icelandic bank three years ago.
The referendum was triggered by President Olafur Grimsson's decision - announced on Sunday - to reject compensation legislation earlier approved by parliament.
The governments of Britain and the Netherlands want Iceland to repay some 5 billion dollars after they initially stepped in to compensate their citizens who lost money when the Icesave bank, an arm of the Landsbanki bank, collapsed in the autumn of 2008.
In a March 2010 referendum, voters had roundly rejected an earlier deal, apparently fearing that the sums involved would choke Iceland's economic recovery, with the country already saddled with large debts.
Grimsson cited a lack of 'consensus' - both within parliament and among the people of Iceland - in justifying his decision.
Prime Minister Johanna Sigurdardottir expressed disappointment, saying the parliamentary vote should have been sufficient.
A recent opinion poll based on online replies from 13,000 people suggested that about 50 per cent of voters back the revised deal, while 36 oppose it.
The new agreement contains terms on a ceiling for annual payments and fixed interest rates until mid-2016, when repayments are set to begin. The repayments are to be concluded by 2046.
Resolving the Icesave issue is seen as key for Iceland to focus fully on its negotiations for European Union membership.
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