PRESS RELEASE FROM THE ICELANDIC PM OFFICE:
Today, the International Monetary Fund published a report: “Review Under the Emergency Financing Mechanism”. The review was part of the IMF’s Emergency Financing Mechanism procedures, which were used to expedite the approval of the Stand-By Arrangement with Iceland on November 19, 2008.
The report was constructed after an IMF five-day visit to Iceland in December to review recent financial, economic, and policy developments. During the visit, the mission had productive meetings with Iceland’s authorities, as well as parliamentarians and various others representatives of the country’s civil society.
The Report and a press release issued by the Prime Minister’s Office can be approached here:
Interim Review Under the Emergency Financing Mechanim (.pdf)
[…] entstand und kürzliche finanzielle, wirtschaftliche und politische Entwicklungen bewertet. Siehe IceNews (auf […]
Forgot this article.
http://network.nationalpost.com/np/blogs/fullcomment/archive/2009/02/12/the-man-who-won-t-go-away.aspx
“question ? said:
No matter how the government wants to “spin” the IMF report the outlook is not positive.”
Could you name the country which outlook is positive?
And remember – Fitch and Moody were absolutely sure that Iceland was alright. Were they blind?
Just a question.
Just as answer to your dreams, guys – here are mine.
1. To rent Keflafik to Russia (for 100 euro per year – yes ONE hundred). And then tell Vilhjalm Antonsen “Come and take if you can” ;)
2. To sell everything to China and let Vilhjalm Antonsen to deal with Chinese (if he dares).
Seriously, to your question
“Let’s see, if you nationalize everything and everyone in Iceland, sell everything (including the entire island) to foreigners, sell all Icelanders into slavery for the rest of their lives, that would bring in how many dollars?”
the answer is NONE. There is only one country with cash that can afford to buy now – China. But then see my point number 2.
If Germans banks (or whatever) want to buy Icelandic lava – then Iceland will sell it as gold. Why not? Stones against numbers on screen – very fair deal. Unless you ready to pay cash – but you are not.
So let’s say that 95 square kilometers of priceless lava field cost 1 billion “usd” each. Okay, okay – minus discount plus interest – and you’ll get 10 square kilometers of black sand beaches in North-West fjords. And we are done! :)))
Oh! I forgot. You can get new tonlistahus – concert hall!!! But will have to ship it to your place at your own expense!
PS. All above is a silly joke of course. But not more silly than Vilhjalm Antonsen calculations :)
Good points VA. As you say, we’ll have to wait and see.
@VA
Right on the spot, this is even happening now, but the goberment and media, are and will sell the news as foriners are interested in investing in icelandic companies whenin fact they are just takeing them over cuz its better than nothing. They will take over everithing in this contry and the gob. will sell it as foringers are investing in Iceland.And Icelanders are so … desperate to belive that everything is ok that they will belive it, our greatest example our good old dumb Fishy.
It’s pretty obvious that the IMF has strict control on the proceedings, and that is good, because after all things doesn’t look that bad: They have managed to stabalise the ISK with the strict monetary rules, the trade balance looks good again and the inflation is cooling down.
VA; a lot of those 95 billions are most likely international interbank loans, which the old banks probably won’t be able to handle. This will quite likely finally result in bankruptcy of those _old_ banks, which again means that the icelandic people don’t have to worry about those amounts.
Govt debt for depositor guarantee is $5Bn and the recapitalisation exercise will be $2Bn (?) giving debt of 70% of GDP?
Practical terms, Govt expenditure will have to keep the country going as the domestic credit hurricane works its way through Icelandic commercial and residential markets. ISK funding for local business will be difficult as lending will be limited.
Unemployment will stabilise, but only due to emigration and reduction in foreigners. This place will get quiet.
@Bromley, the creditors have claims not just against the old banks but the new ones too. How can the government of Iceland strip out all the good assets and put them in the new banks and leave most of the junk – the losses and uncollectible debt – in the new ones? They can’t. For purposes of legal liability, the old and new banks are one and the same.
Furthermore, if Iceland really did nationalize the banks, then the Central Bank/government is liable. About 40% of the banks’ debts were to Icelandic businesses, either real Icelandic companies or the fake holding companies owned by the Bjorguls, JAJ etc. That means that the foreign creditors get large shares of all the debtor companies, since, as I have said before, he who controls the debts controls the company. They may be mostly worthless but the creditors get them. I would guess that a fair amount of Icelandic real estate will end up in foreign hands. Probably big companies like Hafskip too, the fishing quotas (which have been leveraged 2-3 times already) and maybe the entire agricultural industry.
Perhaps that is one reason the new banks have written off about 60% of the loans to Icelandic companies – to make it difficult for the foreign creditors to gain control of Icelandic companies. Iceland is willing to give them a box – an empty box.
A smart move by Iceland, we shall see if they get away with it.
I’m not in favor of foreigners taking over all the assets in Iceland, it’s just that if you follow the rules of creditors and debtors in bankruptcy, then the transfer is inevitable. And senior lien-holders (i.e. the bondholders, the German banks) get first priority.
So the banks manage to steal borrow $10bn without anyone in Iceland being aware of it at the time! Resignation isn’t good enough for these people, they should be tarred and feathered.
No matter how the government wants to “spin” the IMF report the outlook is not positive.
Very robust and painful objectives must be undertaken and soon with regards to the banking sector.
VA. I don’t think Iceland has to cover the debts of the banks, just the EUR 20k depositor guarantee. There’s been some mention of Icelandic government guarantees of some bonds (presumably made when things didn’t look so dire), but I’ve yet to see that in print.
Not sure what the bond holders can do other than accept equity in the new banks.
The IMF needs to bring a shipload of money. Apparently the foreign debt of the banks has been upgraded and could be as high as 95 billion dollars.
Let’s see, if you nationalize everything and everyone in Iceland, sell everything (including the entire island) to foreigners, sell all Icelanders into slavery for the rest of their lives, that would bring in how many dollars?
Erlendar skuldir bankakerfisins *námu* 95 milljörðum dollara, IMF skýslan
Í skýrslu Alþjóðagjaldeyrissjóðsins kemur fram að gögn fyrir lok september gefa til kynna að erlend skuld bankageirans hafi numið um 95 milljörðum dollara fyrir hrunið – borið saman við fyrri áætlun um 84,7 milljarða dollara. Þetta jafngildir 11.000 milljörðum króna.
Þar kemur einnig fram að nýju bankarnir skulda smáfjárhæðir erlendis en stærstur hluti skuldanna er enn í gömlu bönkunum og verður annaðhvort að heimta upp í þær eða afskrifa þær í gjaldþrotameðferðinni. Þetta hefur ekki áhrif á greiningu greiðslugetunnar segir í skýrslunni.