Iceland was headed on Sunday for tense talks over its next government after an alliance led by the anti-establishment Pirate Party gained ground against the ruling centre-right in a vote triggered by the Panama Papers scandal. Final figures from Saturday's snap election pointed to a deadlocked outcome, opening the way for tough horse-trading over the next government in the North Atlantic island nation.
Prime Minister Sigurdur Ingi Johannsson of the centrist Progressive Party told the national broadcaster RUV he would resign at 1500 GMT. President Gudni Johannesson is then set to task Finance Minister Bjarni Benediktsson, whose conservative Independence Party won most seats, with trying to form a new government.
According to final results issued on Sunday, the governing coalition of the Independence Party and the Progressive Party together won 29 seats in the 63-member parliament, down nine.
The Pirates and its three centre-left allies won 27 seats, reaping gains from popular anger with establishment parties but falling short of a majority in the legislature, the Althingi.
The Pirates picked up 10 seats, more than tripling its representation in the outgoing parliament.
The Left-Green Movement also picked up 10 seats, the Social Democrats three, and the centrist Bright Future Movement four.
The centrist Regeneration Party, which won seven seats, now finds itself able to determine the fate of coalition talks.
But negotiations between Regeneration and Benediktsson's Independence Party could be tough. The parties fell out over holding a referendum on resuming the nation's EU membership talks, stalled by the incumbent conservative government. "We have not been negative towards other parties or how governments should be formed," Regeneration Party leader Benedikt Johannesson told AFP. But he said his party could be "very demanding in the bargaining process".
The election was triggered after the Panama Papers revealed that 600 Icelanders including cabinet ministers, bankers and business leaders had holdings stashed away in offshore accounts. The scandal claimed the scalp of Johannsson's predecessor, Sigmundur David Gunnlaugsson, mired in allegations about family holdings stashed in tax havens.
The episode revived fierce public anger first stirred by the 2008 financial crisis, which wrecked Iceland's banking industry and plunged the country into recession, prompting it to seek a humiliating bailout from the International Monetary Fund (IMF).
"The Independence Party is being rewarded for its role in corruption," one Pirate Party cofounder, Smari McCarthy, told RUV.
The Pirates Party has a five-point programme that includes holding a referendum on EU membership, constitutional change to make leaders more accountable, greater protection of natural resources and the closure of tax loopholes for large corporations. The group, set up just four years ago by anarchists, activists and hackers, said it was pleased with its gains, even if it alliance failed to secure an absolute majority.