Iceland is seeking $4 billion in loans in addition to the $2 billion it has asked from the International Monetary Fund (IMF), its prime minister said on Monday. Geir Haarde also told Reuters in an interview that next year would be a bad one for his small nation's economy, with the budget deficit set to soar. At the same time, he maintained his stance that entry to the European Union was not a panacea.
"I mentioned the figure of $6 billion. We have had $2 billion from the IMF so we are talking about roughly $4 billion from a number of sources," he said when asked how much extra the small north Atlantic nation needed to borrow. "I could imagine the Nordic countries being very important, but we have also discussed (with) Russia, Japan and also some others," he added, saying the European Central Bank and the US Federal Reserve were among the candidates too.
Haarde earlier said gross domestic product could drop as much as 10 percent next year. "We are looking at one very bad year as far as the fiscal situation is concerned," he said. The 2009 budget adopted at the start of October included a budget deficit forecast of 3.5 percent of GDP but fiscal slippage appeared inevitable, he said.
"I think it will be substantially larger," he added, predicting the deficit would be more than double this figure but less than triple, that is between 7 and 10.5 percent of GDP. He said funds from the IMF would be used by the central bank to stabilise the currency market and exchange rate.
A poll in an Icelandic newspaper on Monday showed public support for entering the European Union and adopting the euro had surged to 70 percent. In September, support for EU entry was 55 pct while backing for euro entry was at 44 percent. However, Haarde was more cautious. "My position has not changed. It is confusing at the moment to take up this issue as a panacea," he said, adding that any entry to the euro zone would take several years.
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