IMF plans fresh Iceland aid, says economy stabilizing

WASHINGTON: The International Monetary Fund said Sunday it planned to release the fifth installment of an Iceland aid package late this year or early next year, noting the country's economy was further stabilizing.

The IMF agreed in November 2008 to lend Iceland up to 2.1 billion dollars in an effort to stave off the collapse of the local economy, which was hard-hit by the global financial crisis.

In September, the Washington-based lending institution approved a 167-million-dollar tranche of the bailout, bringing its loan to the Atlantic island to around 1.37 billion dollars.

"Iceland's post-crisis stabilization is continuing, supported by a steady implementation of program policies," the IMF said in a statement after completing talks on a review of the aid package.

IMF mission chief Julie Kozack said "more time is needed to assess the impact of new measures under consideration to facilitate household debt restructuring," noting discussions for the review will continue over the "next few weeks."

The fund noted that Iceland's inflation was slowing and the trade balance was in surplus.

"Growth is gradually recovering and is expected to gather steam in 2011, but the pick-up is likely to be slower than previously projected on account of delays in investment projects," it added.