Honor the repayment deal: UK to Iceland

UK chancellor Alistair Darling advised Iceland to repay the money lost in a failed Icelandic bank for making the things run smooth for the nation. The move assumes significance as Olafur Ragnar Grimsson, Iceland President is likely to decide on the reimbursement of nearly €4bn lost by British and Dutch savers in Icesave, in a short time.

Iceland's government has been facing stiff opposition from the public for the repayment but the move is necessary for securing support from the International Monetary Fund (IMF) and maintaining its credibility in the market.

Mr. Darling admitted the economic burden of repayments on the financial health of Iceland but said that it would prove beneficial for the economy of the country in a long run.

Mr. Darling added, "I would say to people in Iceland I know this is difficult, but you have to realize that the British government had to step in to deal with a very difficult situation with savers in Icelandic banks."

It should be recalled that legislation on repayment was passed but Mr. Grimsson withheld his signature, required for the deal to materialize.