Iceland Gets $200 Million Long-term Loan From Poland

Iceland's Finance Ministry has signed an agreement with Poland to receive the equivalent of $200 million in long-term financing as part of its ongoing drive to prop up its struggling economy and shaky currency.

The loan of 630 million Polish zloty comes with a 12-year maturity and a grace period of five years.

"The loan will buttress Iceland's liquid foreign exchange asset position and serve as a supplement to the $2.1 billion loan granted by the International Monetary Fund in support of Iceland's economic stabilization and reform program," the Polish and Icelandic ministries of finance said in a joint statement Sunday.

The loan will be disbursed in three equal tranches and are conditional upon the approval of the second, third and fourth IMF reviews of the island's economic progress.

Iceland suffered a near meltdown last autumn as its three biggest banks representing 85% of the banking sector were toppled by $80 billion of debt, several times the country's GDP. Its three main banks were nationalized in rapid succession, causing capital markets to freeze up and its currency to freefall.

Since then, the economic situation has stabilized, although much remains to be done before normal conditions are restored.