16:11 GMT +3 hours27 November 2014
Live
Business

Russia refuses $500 million loan to Iceland

Business
1000
Russia's government has refused to grant a $500 million loan to Iceland, the Finance Ministry said Wednesday.

MOSCOW, October 14 (RIA Novosti) - Russia's government has refused to grant a $500 million loan to Iceland, the Finance Ministry said Wednesday.

"The decision is dictated by the need to restrain the growth in state spending amid conditions of a deficit budget," the ministry said in a statement.

A delegation from Iceland traveled to Moscow a year ago for a series of meetings to agree the terms of a loan that would allow Iceland's government to shore up its shaky national currency, the krona, which collapsed after the country was forced to nationalize its three main banks after they amassed debts of over $60 billion.

Iceland's foreign debt now is several times higher than the country's GDP. Iceland originally asked Russia for a 4 billion euro ($5.8 billion) loan, but after it received most of the sum from Scandinavian countries and the IMF, the sum of the requested loan went down to $500 million.

Earlier it was reported that Russia also refused a $5 billion loan to Ukraine and a $500 million tranche to Belarus. However, the Russian government is ready to provide financial assistance to Serbia and could extend a loan to Bulgaria, Finance Minister Alexei Kudrin said earlier.