By Tasneem Brogger and Helga Kristin Einarsdottir Feb. 2 (Bloomberg) -- Iceland's new government, led by Social Democrat Johanna Sigurdardottir<http://search.bloomberg.com/search?q=Johanna+Sigurdardottir&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>, 66, and including the Left Greens, said it will work with the International Monetary Fund to rebuild the island's crippled economy though it aims to cut interest rates.
The coalition will be "prudent and responsible" in economic and fiscal matters and will "prioritize social values, the principles of sustainable development, women's rights, equality and justice," it said in an e-mailed statement yesterday. The government called early elections for April 25 The previous government, led by Geir Haarde<http://search.bloomberg.com/search?q=Geir+Haarde&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>'s Independence Party, in which the Social Democrats were a junior partner, split after the banking system capsized and the krona plummeted, forcing it to seek an IMF bailout and sparking weeks of street protests. The IMF has said the success of the economic program it drew up with the government hinges on the central bank's determination to use interest rates to stabilize the krona. The central bank on Jan. 29 kept the benchmark interest rate at a record 18 percent, bowing to demands from the IMF, which had advised against a cut. "A review of the central bank's monetary policy will be launched," the new government said in the statement. "Targeted measures will be explored for reducing interest rates as rapidly as possible, and a schedule will be established for the relaxation of currency restrictions." New Board The coalition will replace the board of Sedlabanki, currently led by Governor David Oddsson<http://search.bloomberg.com/search?q=David+Oddsson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>. The bank's policy will be decided by a single governor, instead of three, as was the case under the previous board. Mar Gudmundsson<http://search.bloomberg.com/search?q=Mar+Gudmundsson&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1>, deputy head of monetary and economic affairs at the Bank for International Settlement, has been asked to take on the post of governor, Morgunbladid reported on Jan. 30. The board of the Financial Supervisory Authority will also be replaced and Iceland will enlist foreign assistance to restructure the regulator. The government said membership of the European Union will not be decided without a referendum. It will mandate a committee to analyze attitudes to the EU, the statement said. The committee will issue a report on April 15 that will include "an assessment of the position and prospects of Iceland for cooperation with European nations and future options in currency matters." The government will present a bill to parliament this month on mortgage-payment adjustment, regularization of foreign-currency related loans and the postponement of forced sales of residential accommodation for as long as six months, the statement said. Loan Program Housing loans held by the former commercial banks will be transferred to the Housing Financing Fund or other means will found to ensure that the HFF's solutions to repayment difficulties are applied fully for mortgaged loans of individuals with loans with state banks. In addition, a long-term program for further addressing the indebtedness of households will be presented at the end of March, according to the statement. This program will include proposals for financing and assessment of the cost to the Treasury and the implications for financial stability. Iceland, the fifth-richest nation in the world per capita in 2007, was forced to seek a bailout from the IMF in October. Gross domestic product will shrink 9.6 percent this year, the IMF has estimated, the biggest economic slump since World War II and since the island won independence from Denmark in 1944. The country came under IMF administration at the end of last year after its banks, which had amassed debt 10 times the size of the economy, were unable to get short-term financing. http://www.bloomberg.com/apps/news?pid=20601087&sid=awIEuzLTiTsM&refer=home -- "Face the brutes." That is a lesson for all life—face the terrible, face it boldly. Like the monkeys, the hardships of life fall back when we cease to flee before them. Swami Vivekananda --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
