In mid April, after long delays, the IMF board approved the disbursement of Iceland’s third loan instalment, amounting to $159 million, in mid April. The delays were caused by a dispute between Iceland and the UK and the Netherlands over compensation to British and Dutch account depositors in the collapsed Icelandic bank Icesave. The IMF had refused to complete the review because the European Union portion of the financing was being held up. Although no concrete agreement on the Icesave dispute has been made yet, Iceland is under increased pressure after the European Free Trade Association in a late May letter advised of the country’s legal obligation to insure a minimum deposit guarantee of €20,000 per saver. Meanwhile, worries remain over Iceland’s debt sustainability (see Update 71).
The IMF and the World Bank are increasingly engaged with the challenge of addressing how tax avoidance and evasion affect developing countries, but need to address the role played by multinational enterprises and tax havens in exacerbating inequality and undermining countries’ domestic revenues.
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