Iceland seeks rescue package from IMF and Central Banks

Reykjavik/Stockholm - Iceland was reported Monday to be inching closer to secure support for a rescue package from the International Monetary Fund (IMF) and several central banks.

The online edition of the Financial Times reported that the plan was worth 6 billion dollars, and that the IMF was to provide some 1 billion dollars.

Other central banks in the Nordic region as well as the central bank of Japan were also part of the overall deal, the report said.

A week ago, the Icelandic central bank said it drew 400 million euros (543 million dollars) from the central banks of Denmark and Norway. This was in accordance with a May agreement it made with the central banks of Sweden, Norway and Denmark.

Over the weekend six Icelandic cabinet members discussed possible terms of a loan from the IMF.

Commerce Minister Bjorgvin G Sigurdsson was quoted as telling the Frettabladid newspaper that there was need for a quick solution.

Another cabinet member, Industry Minister Ossur Skarphedinsson, said that a deal with the IMF would help pave the way for loans from other sources.

Prime Minister Geir Haarde has said he hoped for an announcement this week.

The economy of the North Atlantic nation of some 300,000 people has come under severe strain amid the global credit crunch. The three largest banks, which have run up liabilities at least five times that of Iceland's gross national product in recent years, have been nationalized under special legislation. dpa