Repayment deal over Icesave affair 'close'

Iceland expects to agree on a deal in the next few days to repay Britain and the Netherlands for their bailout of depositors in a failed Icelandic bank, the North Atlantic island's prime minister said yesterday.

Johanna Sigurdardottir's comments came after a report from Iceland's Channel 2 television at the weekend that a deal was close over the Icesave affair, named after the deposit scheme which failed, leading the British and Dutch to spend 5 billion euros (4.2bn) to repay local depositors.

Resolving the affair, after Icelanders rejected a previous deal in a referendum, is seen as a precondition for the island to return fully to the international fold, get its markets up and running and potentially secure EU membership.

Ms Sigurdardottir told parliament she expected the agreement to be finalized "this week" and that it would be presented to the budget committee and the foreign affairs committee for approval.

Sh said "two or three" points remained unresolved but that there had been progress on these.