This week the Republic of Iceland will prepay the loan taken from Poland in 2009, in connection with the Stand-By Arrangement with the International Monetary Fund (IMF) following the collapse of the Icelandic financial system. The prepayment amounts to 204 million złotys, the equivalent of 7.3 billion Icelandic krónur.  The loan facility offered by Poland totalled 630 million złotys, and Iceland borrowed about a third of that amount.  The original maturity of the loan was during the period 2015-2022. 

Icelandic Minister of Finance and Economic Affairs Bjarni Benediktsson, Central Bank of Iceland Governor Már Guðmundsson, and Polish Minister of Finance Mateusz Szczurek signed an amendment to the loan agreement between Poland and Iceland, enabling the Treasury to prepay the loan from Poland. Mr. Szczurek is in Iceland for an official visit at the invitation of the Minister of Finance and Economic Affairs.

“By offering Iceland a loan at a most difficult time, thereby helping us to revitalise our country, Poland offered us a helping hand in a spirit of friendship and generosity. Such friendship is invaluable, and the Icelandic people wish to thank you for it,” said Bjarni Benediktsson at a meeting of the two ministers today.

Repayment marks a turning point

Iceland’s repayment of the Polish loan marks a turning point, as it concludes the settlement of the bilateral loans Iceland received in the wake of the crisis. In 2014, the Treasury and the Central Bank prepaid the outstanding balance of the loans from the Nordic countries.

The Central Bank has already prepaid the majority of the loan from the IMF. The remainder is due at the end of 2015 and in the first half of 2016.
Iceland’s ready access to foreign credit markets, as is evidenced by its successful eurobond issue in 2014, together with the progress made in economic and fiscal affairs in recent years and the improvement in Treasury performance, has enabled the country to prepay the loans taken in the wake of the collapse of its financial system.