VZCZCXRO9083
PP RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR
DE RUEHRK #0198 3081801
ZNY CCCCC ZZH
P 041801Z NOV 09
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC PRIORITY 4211
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

C O N F I D E N T I A L REYKJAVIK 000198 
 
SENSITIVE 
SIPDIS 
 
TREASURY FOR MYERS AND NORTON 
NSC FOR HOVENIER 
 
E.O. 12958: DECL: 11/04/2019 
TAGS: EFIN IC NE PGOV PREL UK
SUBJECT: ICELANDIC GOVERNMENT OPTIMISTIC PARLIAMENT WILL 
PASS ICESAVE AGREEMENT, TURNS FOCUS TO BUDGET 
 
REF: A. REYKJAVIK 191 
     ¶B. REYKJAVIK 190 
     ¶C. REYKJAVIK 176 
 
Classified By: CDA SAM WATSON FOR REASONS 1.4 (B) AND (D) 
 
¶1. (C) In a meeting with Charge and Econoff, Minister of 
Finance Steingrimur Sigfusson stated that he believes by next 
week the Icesave agreement will be out of committee and 
return to parliament for its second reading.  He said that 
the government had learned from the last vote on Icesave and 
that this time the process will not drag out for months. 
Sigfusson expressed confidence that the vote will occur, and 
that the bill will pass, prior to the November 30 deadline 
stipulated in the amended Icesave agreement. 
 
¶2. (C) With the Icesave issue seeming on track, the 
government has directed its attention to completing the 2010 
budget by the November 30 deadline under Icelandic law.  In 
an effort to address record deficits, the government is 
considering implementing significant budget cuts and tax 
increases, while also balancing the need to attract foreign 
investment (reftels A and B).  Sigfusson acknowledged that 
the goals in the 2010 budget are ambitious, due in part to 
the larger than expected drop in consumption.  He noted, 
however, that despite revised estimates projecting less 
growth in 2010 than previously anticipated, he expects the 
country to rebound even stronger in 2011 with some 
flexibility and understanding from the IMF. 
WATSON