THE Social Democrats emerged as the big winners of Iceland’s election on April 26th. Their coalition partner, the Left Greens, also did well. The big loser was the Independence Party, which for the first time in 18 years will not be in government. The prime minister will be Johanna Sigurdardottir, an openly gay former air hostess who has held the job in an acting capacity since the previous government gave up in January. . .

. . . The government has yet to finalise all of the terms of its $2.1 billion loan from the IMF, pending an audit of the banks and its own budget. Negotiations with the British and Dutch governments over repayment of the $5.8 billion still owed in respect of Landsbanki’s Icesave depositors are deadlocked. The projected debt from the IMF and Scandinavian rescues, combined with Icesave’s obligations, will exceed $11.1 billion, roughly equal to Iceland’s GDP in 2007. So the budget, when finally presented, is likely to contain some swingeing spending cuts and tax rises. Economist website - 30-Apr-09.

http://www.economist.com/world/europe/displaystory.cfm?story_id=13577975