Treasury and Central Bank prepay foreign loans
Today the Republic of Iceland and the Central Bank of Iceland prepaid loans granted from its Nordic neighbours in connection with the Government’s IMF-supported economic programme from 2008. The prepayment amounted to 735 million euros, or 114 b.kr. The loans in question originally matured in 2019, 2020, and 2021. With this payment, the Icelandic authorities have repaid in full the Nordic loans, which amounted to 1,775 million euros.The decision to prepay the loans was taken following the Treasury’s European bond issue, announced on 8 July, in the amount of 750 million euros, or 116 b.kr. The bond issue gave the authorities the scope to retire the Nordic loans, which bore a higher interest rate. The bond issue and repayment do not affect the Treasury and Central Bank’s combined net debt, but they increase gross Treasury debt by approximately 1.9% of GDP, mainly because a portion of the borrowed funds are used to pay down debt recognised in the Central Bank’s accounts. The Central Bank’s foreign exchange reserves are unchanged as a result of the above debt management measure.
Further information can be obtained from Már Guðmundsson, Governor of the Central Bank of Iceland, at tel: +354 569-9600.