Iceland’s Cabinet Quits

The escalating economic crisis in Iceland has led to the resignation of the coalition government.

The announcement came after talks between Conservative Prime Minister Geir H. Haarde and his Social Democratic coalition partners failed.

A statement posted on the Government of Iceland’s website said: “Iceland’s Prime Minister, Geir H. Haarde, announced today (Monday 26) the resignation of the coalition government of the Independence Party and the Social Democratic Alliance.

At 16:00 the Prime Minister met with the President of Iceland, Mr Olafur Ragnar Grimsson, and handed in a resignation of the government. The President has requested that the outgoing government remains in office until a new government is formed.”

This makes Geir Haarde the first leader to leave office as a direct result of the global financial crisis, which in Iceland has seen the collapse of the currency and banking system along with rising unemployment and daily protests.

Mr Haarde told reporters on Monday that he could not accept the Social Democratic demand that they would lead the government.

Iceland has been plunged into crisis since the collapse of the country’s banks under the weight of debts built up during years of swift expansion. Iceland currently faces debts amounting to billions, which it owes to Europeans who held accounts with subsidiaries of collapsed Icelandic banks.

Last Updated: 06/02/2009 18:53:43 By Charlotte Jacques