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Emerging Markets Weekly

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The Icelandic government was debating on Sunday

Mon, Oct 20 2008, 09:59 GMT
by Erste Bank Bond Research Team

Erste Bank der oesterreichischen Sparkassen AG

EMERGING MARKETS

Stock markets are close to bottoming as the global financial storm has beaten valuations down to very cheap levels, emerging markets investment guru Mark Mobius said on Monday. He said stocks may lose another 10-15 percent before rebounding. Emerging markets have lost almost half of their value since June, more than the MSCI's all-country stock index, which has fallen 40 percent. "We are getting close to bottoming. We will bounce up and down for a while; there are a lot of stale bulls waiting to get out. Markets will rally then get hit again, there may be another 10 to 15 percent downturn," Mobius, executive chairman of Templeton Asset Management, which has about $30 billion in assets under management, told Reuters in an interview. He said the current financial crisis was not the worst he had seen in emerging markets and disagreed with pundits forecasting a long and drawn-out recession or depression. "For us in emerging markets the 1997-98 Asian financial crisis was worse. Guys went from multimillionaires to selling sandwiches in the street. We haven't seen this yet," he said. He said he expected smart money would start coming in to markets as stock valuations had become very cheap. As always, he said, timing the precise bottom was difficult. "We are buying stocks with single-digit price-toearnings ratios, price-to-book little more than one, dividend yields of around 5 percent. Tupras refiner in Turkey, for example, now has a dividend yield of around 20 percent," Mobius said. Templeton's favourite emerging markets include China, India, Russia, Turkey and South Africa.

LATIN AMERICA

Argentina

Argentina may ease its defense of the peso, allowing for a 16 percent slide by year-end, to stem the loss of foreign reserves amid the worst global financial crisis since the Great Depression, JPMorgan Chase & Co. said. The central bank may opt for a one-time devaluation this year to 3.8 per dollar from 3.2086, JPMorgan economist Vladimir Werning wrote in a report. Werning had been forecasting the bank would let it reach 3.8 under a gradual depreciation, known as a ``crawling peg,'' by the end of next year.

Brazil

Brazilian companies' losses on derivatives after the local currency tumbled is ``totally absorbable and manageable,'' Fabio Barbosa, president of the Brazilian Federation of Banks, told Estado de S.Paulo. Brazilian banks are willing to finance companies in need of cash to pay for the losses, the Sao Paulo-based newspaper said, citing Barbosa. Potential losses don't pose ``a systemic'' risk to the country's economy, Barbosa told Estadao. Barbosa also said it is too ``soon'' to judge the impact of the measures announced by the central bank to free as much as 100 billion reais ($47.1 billion) and ease the credit crisis in Brazil, Estadao said.

Chile

Chile's government will auction $700 million in deposits this month to add liquidity to the banking system, Finance Minister Andres Velasco said in Santiago. The government will also provide $850 million in financing to small and medium size companies, Velasco told reporters. Chile's central bank froze interest rates on Oct. 9, citing economic instability. It plans to offer as much as $5 billion in foreign-currency swaps over the next six months, and will accept bank deposits as repo collateral, it said on Oct. 10.

Colombia

Colombia's government cut its 2009 growth forecast amid slowing global growth and lower commodity prices, Finance Minister Oscar Ivan Zuluaga said. The economy will expand 3 percent to 4 percent next year, less than the government's earlier forecast of 5 percent, Zuluaga told reporters in Bogota. Colombia still plans to sell $1 billion in bonds in foreign debt next year and also to borrow $1.4 billion from multilateral lenders in 2009, Zuluaga said. He said that should turbulence in global financial and credit markets disrupt the government's bond sale plans, Colombia could borrow the $1 billion rather than sell bonds in that amount under adverse market conditions.

Ecuador

Ecuador and Bolivia have decided not to take part in the deregulation of trade planned as part of an accord with the European Union, Ecuador's President Rafael Correa said. The four-member Andean Community, which includes Bolivia, Colombia, Ecuador, and Peru, will invite Chile to rejoin the group, Correa added at the end of a summit today in Guayaquil.

Mexico

Mexico's central bank kept its benchmark interest rate unchanged as policy makers balance concerns the economy will slow with predictions that inflation may accelerate again. The bank's five-member board, led by Governor Guillermo Ortiz, left the key lending rate at 8.25 percent. The decision matched forecasts by 18 of 20 economists surveyed by Bloomberg. Two analysts forecast a decrease of a quarter percentage point. While lower borrowing costs may help mitigate the impact of the worldwide credit crisis on a sagging economy, the central bank kept rates steady because a cut would further weaken the currency and trigger faster inflation, said Gabriel Casillas, an economist at Banco UBS Pactual in Mexico City.
Mexico's industrial production fell for the fourth consecutive month in August as output of clothes, metal products and leather declined and fewer large buildings were constructed. Industrial activity sank 1.6 percent in August from the same month a year earlier, the national statistics agency said.

Peru

Peruvian President Alan Garcia on Tuesday swore in a new cabinet after the resignation of all the 17ministers over corruption allegations. Yehude Simon, leftist former governor of Lambayeque province, replaces Jorge del Castillo as prime minister. Ten of the previous cabinet members, including the foreign, defense, trade and tourism ministers, stayed, while six others were replaced. The new ministerial portfolios include Health Minister Oscar Ugarte, Agriculture Minister Carlos Leyton, Interior Minister Remigio Hernani, Production Minister Elena Conterno, Energy and Mines Minister Pedro Sanchez and Women and Social Promotion Minister Carmen Vildoso. Four audio tapes emerged earlier this month linking members of the ruling party to a plan aimed at steering lucrative petroleum contracts to a Norwegian oil company in exchange for bribes. Following the eruption of the scandal, the cabinet led by Castillo resigned en masse.

Venezuela

Venezuela's government had a 3.37 billion bolivar ($1.57 billion) budget deficit in July, according to a budget report published on the central bank's Web site. The government posted a 6.64 billion-bolivar deficit in the first seven months of the year and has posted deficits in six of those months, according to the report. The bank's monthly spending report, which is based on information provided by the Finance Ministry, doesn't include offbudget spending by the government's National Development Fund or social spending by state oil company Petroleos de Venezuela SA.
JPMorgan Chase & Co. cut its 2009 economic growth forecast for Venezuela to 2.5 percent from 3.5 percent on lower oil prices and expectations of a global recession. Should oil prices remain below $90 next year, Venezuela's current account surplus, expected to close the year at 14 percent of gross domestic product, could move into a deficit in 2009, analyst Ben Ramsey wrote in a report published. JPMorgan expects a 30 percent devaluation of the bolivar in 2009 to 2.75 bolivars per dollar, from the current peg of 2.15. While politically unpopular, a devaluation would ``help relieve the pressure on the fiscal deficit, and the magnitude of this projected devaluation may increase depending on how low oil prices ultimately go,'' Ramsey wrote.

AFRICA & MIDDLE EAST

South Africa

South Africa's former defence minister has announced a breakaway party will be launched, splitting the ruling ANC and challenging its years of dominance. "We are going to go and set up a party," Mosiuoa Lekota said in remarks broadcast on South Africa's SAfm radio. It would be set up at a national congress he has called for Nov. 2, he said. The move, which was widely expected, is likely to raise tensions in the biggest political shake-up in the 96-year history of the ANC which has ruled since the end of apartheid in 1994. It will also raise questions about the political direction of Africa's biggest economy. SAfm said Lekota made the announcement while addressing supporters at the Vista branch of the University of the Free State. The party will adopt its constitution at the convention, said the radio station. Lekota, who was suspended from the ANC for threatening to form a new party, has made a wide appeal to South Africans to attend the national congress to discuss what he says are major flaws in the ANC leadership and plan future strategy. "At the convention people must decide what they want to do with themselves. There has to be debate, what will you call it (the party)," said Lekota. "Obviously there will be lots of names and so on. We say to the people 'you go back to your constituency and see which names, which colours, which emblems."
South Africa's government expects the economy to be spared from the worst of the fallout from the current global financial turmoil and does not see an immediate need to tighten lending regulations. ``We are going to be affected, but we think we will still be able to register some decent growth,'' Trade Minister Mandisi Mpahlwa told reporters near the southern town of Mossel Bay, after meeting a panel of business executives who advise the government on economic matters. ``In South Africa, there is strong regulation of banks. We don't have immediate pressures in South Africa to change anything.''

ASIA

China

China's economy, the biggest contributor to global growth, expanded at the slowest pace in five years as the financial crisis cut demand for exports. Gross domestic product rose 9 percent in the third quarter from a year earlier, the statistics bureau said in Beijing. That was less than any of the 12 estimates in a Bloomberg News survey and the 10.1 percent gain in the previous three months. The fifth quarter of slowing growth may exacerbate declines this year in iron ore, copper and oil prices and undermine demand for exports within Asia, where economies are already contracting. The cabinet announced tax cuts for exporters and increased infrastructure investment and the central bank may be poised to cut interest rates for the third time this year.

Indonesia

Indonesia's rupiah will slide 16 percent within six months as foreign-exchange reserves approaching ``alarming levels'' force the central bank to rein in intervention, Royal Bank of Scotland Group Plc predicts. The rupiah, which in September completed its biggest quarterly loss in three years, will tumble to 11,700 per dollar by the end of March, the U.K.'s fourth-largest bank by market value said in a research report sent to clients. The country's reserves dropped $3.8 billion to $56.8 billion in the seven weeks through Sept. 12 as Bank Indonesia sold foreign exchange to support the local currency.
Indonesia, where banks control 79 percent of financial assets, passed a rule to give the central bank and deposit guarantee agency more powers to decide on bailing out lenders and insurance companies. ``This government decree is to anticipate any financial crisis and provide legal basis for the government to act,'' central bank Governor Boediono told reporters in Jakarta. The decree was ``urgent.'' The new regulations will enable authorities in Indonesia, which spent more than 450 trillion rupiah ($45 billion) bailing out lenders in the Asian financial crisis a decade ago, to fund banks in need of liquidity without legal concerns.

Pakistan

Pakistan may be forced to seek a loan from the International Monetary Fund to prevent the nation defaulting on its debt, according to a government official. South Asia's second-largest economy, which has seen its foreign reserves plunge more than 74 percent to about $4.3 billion in the past year, is also seeking financial support from the World Bank and the Asian Development Bank, said Shaukat Tarin, financial adviser to the prime minister. The country has $3 billion in debt-servicing costs in the coming year. ``They are going to have to bite the bullet and sign for the IMF,'' said David Fernandez, the Singapore-based head of emerging markets research at JPMorgan Chase & Co. ``It has to come now.''

Philippines

Philippine inflation may have peaked because crude oil prices have eased, central bank governor Amando Tetangco said. ``Inflation expectations have declined and oil prices have similarly fallen, so we think we have seen the peak of inflation,'' Tetangco said by e-mail. Inflation slowed to 11.9 percent in September from a year earlier. The Philippines has been ``fairly insulated'' from the global financial crisis because ``exposure to troubled banks is minimal,'' Tetangco said. Remittances from Filipinos working overseas are expected ``to be steady,'' he said.
The Philippine central bank may cut the amount it requires lenders to set aside as reserves to boost liquidity in the financial system, effectively lowering borrowing costs, to help spur growth. ``Instead of communicating an easy monetary policy to the market by reducing policy rates, an alternative is to reduce the reserve requirement to infuse liquidity,'' said Deputy Governor Diwa Guinigundo in an interview in Singapore. Every one percentage point reduction in the reserve requirement for banks will free up about 30 billion pesos ($624 million) of cash into the system, Guinigundo said.

South Korea

South Korea's won and stocks rose after the government announced Asia's biggest financial rescue package to open access to overseas credit markets and allay concern of a recession. The won climbed 2.7 percent to 1,299 per dollar at 1:41 p.m. in Seoul. The currency has risen 6 percent since Oct. 16, when it suffered its biggest oneday decline since South Korea required a bailout from the International Monetary Fund in 1997. The benchmark Kospi stock index gained 1.3 percent. South Korea, struggling with Asia's worst-performing currency and a stock market that has lost 37 percent this year, guaranteed $100 billion of lenders' foreign-currency debt and said it will provide $30 billion in dollars to banks. The plan, equal to about 14 percent of gross domestic product, was mapped out in an emergency meeting after Standard & Poor's said the nation's banks may have difficulty securing overseas funds. ``We can expect to see a significant stabilization of the financial markets,'' said Kim Young Il, who oversees the equivalent of $6.5 billion as head of equities at Korea Investment Trust Management Co. in Seoul. ``But it will take time for the real economy to improve, and that means investor sentiment won't immediately show a turn for the better.'' The currency gained as much as 8 percent before trimming its advance, according to Seoul Money Brokerage Services Ltd. The won plunged 9.7 percent Oct. 16 after S&P said there's a greater than 50 percent chance banks won't be able to find foreign funding, threatening their ability to repay short-term debt.

EMERGING EUROPE & CIS

Emerging market countries are turning to the International Monetary Fund to help shore up confidence in their financial systems strained by a global credit crunch. Hungary, Ukraine, Serbia and Iceland all signaled to the IMF during weekend meetings of global finance leaders in Washington they are considering going to the Fund. Unlike in previous crises in many emerging markets, this is a financial sector crisis as opposed to the balance of payments troubles of the past, and the IMF has urged quick and coordinated actions to limit the damage. As governments worldwide have pumped more cash into money markets to restart interbank lending, the U.S. outlined a plan to invest $250 bln in its banks but there were still doubts whether it would revive confidence and avert a global recession. "We have about six or seven countries in the pipeline," a senior IMF official told Reuters, speaking on condition of anonymity. "I wouldn't be surprised if there were about a dozen countries after a few months," the official added. Tighter credit conditions and fears that bank guarantees in developed economies could see more private capital flow out of emerging market assets has policymakers worried. The IMF said on Monday it was ready to offer financial and technical help to Hungary, who has a stable banking system but could find it harder to finance its large debt load as credit tightens. Serbia said it would ask the IMF for a new deal, but an agreement is unlikely to be announced before IMF officials visit Belgrade next month, senior government officials said. "We are certainly not in a group of emergency cases, such as Hungary," one official told Reuters. "But we need the agreement for longer-term stability." An IMF official in Washington told Reuters on Monday that Ukraine had sought IMF help, and press reports on Tuesday said an IMF mission is expected in the capital Kiev shortly.

Azerbaijan

Azerbaijan's incumbent President, Ilham Aliyev, won a total of 88.73% of the votes cast in last week's election, according to the final results published Sunday by the central electoral commission. Six other candidates in the oil-rich former Soviet state - all loyal to the authorities - lagged far behind, with none of them getting more than 3% of votes, said the head of the electoral commission, Mazakhir Panakhov. Second-place Iqbal Agazade won 2.86%, while Fazil Gazanfaroglou trailed in third with 2.47%, Panakhov added. The commission's results are expected to be ratified by the constitutional court within the next four days, paving the way for Aliyev to be sworn in for a second term in office. The Organization for Co-operation and Security in Europe, a democracy watchdog, has said that the poll last Wednesday did not reflect democratic principles although the United States welcomed "progress" compared to previous ballots. The 46-year-old Aliyev was first elected in 2003 with some 77% of votes. He succeeded his father, Heydar Aliyev, who died the same year after leading the former Soviet republic for a decade.

Hungary

Standard & Poor's on Wednesday said it has put the credit ratings of Hungary and Ukraine on review for a possible downgrade due to deteriorating financial sector conditions in both countries. S&P placed Hungary's "BBB+" foreign-currency ratings on "creditwatch negative" due to concerns over mounting financial-sector funding pressures and their potential to raise general government debt substantially, from its current level of 67 percent of GDP. The ratings agency said it will likely make a decision on Hungary's ratings before the end of the year, after it studies the effectiveness and the cost of a package announced by the central bank to shore up the financial system. Ukraine's "B+" long-term foreign-currency debt rating was also placed on "creditwatch negative," as S&P fears a deteriorating economic situation and associated exchange-rate depreciation may hurt the country's financial-sector asset quality. A decision about Ukraine's ratings should be made this month, S&P said.

Fitch Ratings has revised the Outlooks on the Republic of Hungary's Long-term Issuer Default ratings (IDRs) to Negative from Stable. Its ratings are affirmed at foreign currency IDR 'BBB+', Short-term foreign currency IDR 'F2', and Long-term local currency IDR 'A-' (A minus). Its Country Ceiling is affirmed at 'A+'. "The revision of Outlook reflects Fitch's view that shocks from global financial turbulence and the likelihood of recession in the euro area have heightened downside credit risk given Hungary's high external debt stock, wide current account deficit and large external financing requirement," said David Heslam, Director in Fitch's sovereign team. The deterioration in global, and particularly European, financial conditions have heightened the risks for economies with large external financing needs and reliance on bank financing. Hungary's gross external debt amounts to 99% of GDP, one of the highest levels in central and eastern Europe. Financing of the current account deficit - which stood at 6.4% of GDP in 2007 (based on revised official statistics) - is sensitive to strains in international capital and banking markets, with a significant proportion of financing dependent on flows to local banks from their western European parents. Four domestic banks have announced that they are to restrict growth in foreign currency loans. Heightened risk aversion has led to strains in government debt and inter-bank markets and to a weakening of the HUF, which if exacerbated would increase debt servicing requirements and place strains on loan portfolios of the domestic banking system, where foreign currency-denominated loans account for over half of private sector credit. In addition, the global economic slowdown, and particularly the likelihood of a recession in the euro area - the destination for over half of Hungary's exports - has weakened an already subdued growth outlook, increasing the challenges facing the government in its attempts to continue to narrow the fiscal deficit. At 66% of GDP the government's gross debt remains high relative to the 'BBB' median of 28% and low economic growth will make it difficult for the debt burden to fall, while external markets are an important source of financing, including through substantial non-resident holdings of HUF-denominated debt. Fitch notes that the authorities' response to recent events has been strong. The National Bank of Hungary has announced a EUR5bn swap facility with the European Central Bank, while the government has reduced its deficit target to 3.4% of GDP in 2008 and 2.9% in 2009, from original targets of 3.8% and 3.2%, respectively. "Hungary's credit ratings are supported by its robust institutional fundamentals, relatively rich and diverse economy, strong debt management capacity and untarnished modern debt service record." Political and social stability is anchored by membership of the European Union. At USD13,750 (at market exchange rates), income per head is high relative to the 'BBB' median of USD6,900.
Hungary is fighting to persuade international markets it isn't the next Iceland. Hungarian authorities stepped up their efforts at the weekend to reassure nervous financial markets that the country can ride out the turmoil in the global banking system. Prime Minister Ferenc Gyurcsany said Saturday he will talk to banks about helping out mortgage borrowers with foreign-currency loans whose monthly payments are rising as the forint, Hungary's currency, falls. The government also presented plans to cut its budget deficit faster than planned this year and next, an attempt to show that the country has become more fiscally disciplined than a few years ago, when ballooning budget deficits scared markets.

Kazakhstan

KazMunaiGaz National Co., a Kazakh state-owned oil and gas company, said it sales in the first nine months of 2008 doubled from a year earlier as output and refining increased. Consolidated revenue jumped to 2.355 trillion tenge ($19.7 billion) in January-September period, the Astana-based company said in an e-mailed statement. KazMunaiGaz's oil production in the period rose 8.5 percent from a year earlier to 13.3 million tons, the company said.

Romania

The Romanian leu firmed 3.3 percent against the euro in late trading on Friday, reaching a three-week high of 3.6483, bolstered by a flurry of stop-loss trades by foreign players, dealers said. "Some U.S hedge funds from New York have aggressively bought the leu in a stop-loss move after the U.S. markets opening," said one dealer with a foreign bank. The unit hit its weakest level in almost four years at 3.986 on Oct. 6. At 1415 GMT, the leu traded at 3.6590 per euro after touching 3.6483, its highest level in three weeks, and compared with Thursday's close of 3.7733. Overnight rates were indicated at 19/46 percent on Friday, their highest level since April 2007.

Russia

Russia's international reserves, the world's third largest, fell $15.5 billion last week after the central bank sold currency to prop up the ruble as investors pulled money out of the country. The value of the reserves slipped to $530.6 billion in the week ended Oct. 10, after a $16.7 billion decline the previous week, the biggest this year, the central Bank said in an e-mailed statement today. The war with Georgia, slumping commodities prices and the credit crisis prompted investors to withdraw about $74 billion from Russia since Aug. 1, according to BNP Paribas SA, sending the ruble 3.5 percent lower against its currency basket. Bank Rossii sold about $12 billion last week, the most since Jan. 1, to stop the ruble weakening beyond its trading band, says Mikhail Galkin, head of fixed-income and credit research at MDM Bank in Moscow.
Vladimir Putin came to power in 2000 vowing to destroy Russia's oligarchs ``as a class.'' Within two years, he'd driven two into exile and imprisoned another. Now, he may use the global markets meltdown to finish the job. The $50 billion that the prime minister and President Dmitry Medvedev have pledged to lend cash-strapped companies will extend state control over business leaders. Billionaires seeking bailouts -- including Oleg Deripaska, Russia's richest man, and Mikhail Fridman -- will have to give authorities veto power over their companies' financing decisions. ``This will give the state more leverage over the country's biggest companies and main industries,'' said Chris Weafer, chief strategist at UralSib Financial Corp in Moscow. ``In 2008, there is only one real oligarch: the state.'' All this marks a reversal from a decade ago, when oligarchs bankrolled Boris Yeltsin's almost-insolvent government. As recently as April, Russia's 100 wealthiest citizens had a combined fortune equivalent to about a third of the economy, Forbes magazine estimated. The nation's 25 wealthiest businessmen have seen their worth shrink by $230 billion, or 62 percent, according to Bloomberg calculations. And Putin controls the strings on the biggest remaining purse -- $531 billion in government reserves, which he is doling out through state-run Vnesheconombank, or VEB, where he presides as chairman of the supervisory board.

Turkey

Moody’s said that the Turkish banking system has a stable to negative outlook on the basis that the current turmoil in financial markets will impact Turkey. Moody's report stated that the banking system was proving to be profitable and solid asset quality mainly driven by the slowing economy. However Turkey's vulnerability to volatility and shocks could negatively impact banking conditions. Moody's recently upgraded the ratings on one state owned bank and the outlook on 3 other banks. Moody's said that asset quality could fall as a result of the fall in loan growth and the slowing domestic economy. Moody's highlighted that if market conditions continue to weaken then this would restrict the amount of credit available to Turkish companies and lead to negative ratings for Turkish banks.
Turkey's current-account deficit widened in August from a year earlier as more expensive oil and gas drove up the value of imports. The deficit expanded to $3.3 billion from a revised $1.6 billion in August last year, the central bank in Ankara said on its Web site. The gap was forecast at $3.3 billion, according to the median estimate of 12 economists in a Bloomberg e-mail survey. The widening deficit comes as the global credit crisis threatens to restrict the flow of investment to Turkey and make foreign credit more expensive.

Ukraine

Fitch on Friday cut its long-term foreign and local currency issuer default rating on Ukraine to "B+" from "BB-", saying that the outlook for the country remained negative on the rising risks to its financial system. It said it was unconvinced that depositors will remain confident despite central measures barring early withdrawals of term deposits and a potential credit of up to $14 billion from the International Monetary Fund. "The risk of a financial crisis in Ukraine involving a large depreciation of the currency, further stress in the banking system and significant damage to Ukraine's real economy is significant and rising," director in Fitch's Sovereign Group Andrew Colquhoun said in a statement. "Nevertheless, Fitch believes risks to Ukraine's ability to meet its sovereign obligations remain low in the near term owing to the sovereign's modest refinancing needs," he said. Ukraine is discussing potential assistance from the IMF and a presidential aide has said the Washington-based international agency is prepared to extend credit of up to $14 billion to the country.
Ukraine's Prime Minister Yulia Tymoshenko expressed confidence on Monday that talks with the International Monetary Fund would prove successful and that the country would secure "substantial" financial assistance. A statement on the government Web site said Tymoshenko had held a new round of talks on Monday morning with an IMF mission in Kiev since last week. "Prime Minister Yulia Tymoshenko stressed that the talks would come to a successful conclusion and that it was very likely Ukraine would receive substantial financial assistance," the statement said. Ukrainian officials, after launching talks with the IMF last week, said the Fund was prepared to provide up to $14 billion to help stabilise the country's financial system. Ukraine has suffered limited effects from the world wide financial crisis, but its hryvnia currency has weakened and the central bank has ploughed new sums into banks for refinancing.

INDUSTRIAL COUNTRIES

Iceland

The Icelandic government was debating on Sunday whether it would apply for aid from the International Monetary Fund (IMF), with a decision expected within the next day, a minister told a local newspaper. The government had received IMF's conditions for aid and was meeting to decide whether those conditions are acceptable, daily Frettabladid said in its Monday edition. "This has got that far that we are analyzing the conditions, costs and benefits of how this would look like," Bjorgvin Sigurdsson, minister of trade and commerce, told the daily regarding the talks between the government and the IMF. Details of IMF's conditions were not made public. Iceland has also negotiated with Russia about a loan to help the island state after it became the most serious state victim of the global credit crunch.

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Published on  Mon, Oct 20 2008, 10:15 GMT