Page last updated at 00:12 GMT, Tuesday, 3 February 2009

Iceland cabinet 'to end protests'

Protesters in Reykjavik, 26/01
Protesters have become a regular sight on the streets of Reykjavik

Iceland's finance minister has said a priority of the new interim government is to end the protests sparked by the collapse of the country's economy.

Steingrimur Sigfusson acknowledged that Iceland had been severely hit by the global financial crisis, but maintained that it would emerge from it stronger.

Prime Minister Geir Haarde resigned last week after mass protests at his government's handling of the economy.

The Left-Greens and Social Democrats will govern until April's election.

The Social Democratic Alliance were the junior party in the old coalition with Mr Haarde's Independence Party, while the opposition Left-Green Movement now lead opinion polls.

'Open up'

Mr Sigfusson, the Left-Greens' leader, said the government would restore calm to the island nation by "trying to meet all the demands of the people".

Steingrimur Sigfusson (27 January 2009)
Our plans are first of all to regain calm and peace - we are going to deal with things in the open
Steingrimur Sigfusson
Icelandic Finance Minister

"We are going to try to take care of the families, the households and businesses as well as we can in the short period that we are going to be operating in," he told the BBC.

"We are going to take measures to increase direct democracy, change the constitution, and introduce a new electoral law."

"Also, open up, give information, and tell the people the truth about the difficulties we are facing," he added.

Protests against the government and central bank have become a regular fixture in Reykjavik since October, when Iceland's financial system collapsed.

The country's currency has since plummeted, while unemployment - once close to zero - is soaring. The economy is meanwhile forecast to shrink by 9.6% this year and see no growth in 2010.

Mr Sigfusson said the government would at the same time attempt to lay foundations for the rebuilding of Iceland's economy and society.

"We have been severely hit by the global financial crisis, and the internal collapse of the banking system, but we are going to get out of this," he said.

After being sworn in on Sunday, Prime Minister Johanna Sigurdardottir said one of her first acts would be to "change the leadership of the central bank", which failed to prevent the collapse of the banking system.


Protesters picketing parliament have blamed the bank's governor, former conservative Prime Minister David Oddsson, for Iceland's rapid economic expansion that imploded last year.

On Monday afternoon, Ms Sigurdardottir wrote to the three governors asking them to quit.

"I have requested that they resign immediately and enter discussions on their departure," she said.

As yet, there has been no reaction from the governors.

Ms Sigurdardottir - Iceland's first female prime minister and the world's first openly gay leader - also announced that she had asked a parliamentary committee to look into joining the European Union.

However, Mr Sigfusson said the interim government would not make any decisions about the EU before the general election on 25 April.

"It'll be up to the next government to decide, and of course to the Icelandic people," he said.

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