Iceland has reached a deal with the British and Dutch governments to reimburse them for compensating savers who lost money in the collapse of Icesave bank, the Icelandic government said.
'An understanding has been reached with the UK and the Netherlands,' a statement from Prime Minister Johanna Sigurdardottir's office said.
Iceland's parliament approved in August a controversial deal to pay back €3.8 billion to the British and Dutch governments for the compensation they forked out to disgruntled savers from Britain and the Netherlands.
However, in order to pass the deal through the Icelandic parliament, Sigurdardottir negotiated several amendments that required the approval of London and The Hague.
The British and Dutch governments rejected one of the amendments, regarding the expiry date of the state's guarantee for the repayment, set for 2024 regardless of whether the amount was paid in full.
In the deal announced on Sunday, the Icelandic government has agreed that its state guarantee will not expire in 2024 and it will continue to make payments until the debt is paid in full.
The change needs to be submitted to Iceland's parliament for approval.
Sigurdardottir added that now that the Icesave dispute was resolved, she expected a repeatedly-delayed International Monetary Fund review of Iceland's recovery programme to take place 'as soon as this month'.
The IMF granted Reykjavik a €1.6 billion loan after its dramatic economic collapse a year ago, but its first review has been delayed since February due to the Icesave conflict.
Before launching its review, the IMF wants assurances from the Nordic countries on their loans to Iceland, which will not be forthcoming until Iceland resolves the Icesave dispute.
