UK offers flexibility after Iceland votes No

The United Kingdom has offered more flexibility to reach a deal with the government of Iceland for about £2.3 billion that the island nation owed it since the collapse of the online savings bank Icesave.

Chancellor, Alistair Darling has said that Britain is "prepared to be flexible" even as the people in Iceland overwhelmingly voted 'NO' in a referendum to decide the deal in which the country will pay its debt.

More than 93 per cent of voters rejected a plan which involved the payment of debt to Britain and the Netherlands. The turnout for the referendum was about 62.5 per cent. This could seriously affect the international support for the struggling economy of the country. Now the negotiators again busy designing possible ways to reach an agreement.

The citizens are blaming bankers and politicians for the crisis which crippled the economy of the nation. They say that the government should first concentrate on helping its own citizens instead of paying off foreign governments.

The finance minister of Iceland, Steingrimur Sigfusson reaffirmed that the government is committed to pay back its debt to other countries and indicated that the new deal could be reached within days.

Mr. Darling said that he wants the country to be included in mainstream Europe and the process to bring it, is already on.

Under the deal which was rejected by the voters, Iceland was to pay €3.9bn to the governments of UK and the Netherlands by the year 2024. Teh rate of interest was decided at 5.5 per cent. The amount is to compensate the payments these countries made to their citizens who lost their deposits when the Icesave collapsed in 2008.

The amount equaled to about 40 per cent of Iceland's GDP and about £10,000 for every citizen of the total population of 320,000. The deal received government's approval and the payments had become state guaranteed.

The president of Iceland, Olafur Ragnar Grimsson explaining the NO vote said that it was not that the country is unwilling to pay its debts but it is asking for the repayment at fair terms.

Both, the British and Dutch governments offered flexible deals last week and these deals will have to be discussed in detail.

Iceland is facing challenges as the country's failure to reach an agreement could seriously affect its credibility and it ability to borrow from international bodies like the International Monetary fund. Several countries have already refused to offer portion of a $2.1bn loan for the country. The differences over the deal also affect the prospects of the country joining the European Union.