Social Democrats asked to form new government in Iceland

January 27th, 2009 - 9:31 pm ICT by IANS  

Reykjavik, Jan 27 (DPA) Iceland’s President Olafur Ragnar Grimsson Tuesday asked centre-left Social Democratic Alliance Party to form an interim government after the collapse of the ruling coalition amid deep economic crisis and political discord.The Social Democratic Alliance were part of the grand coalition formed in 2007 with the conservative Independence Party that collapsed Monday.

Social Affairs Minister Johanna Sigurdardottir of the Social Democrats was seen as a likely interim premier since the leader of the party, Foreign Minister Ingibjorg Solrun Gisladottir is to remain on leave of absence following treatment for cancer.

Sigurdardottir, 66, was likely to try to form a minority government with the Left-Green Movement until new elections are held.

Outgoing Prime Minister Geir Haarde Friday said his party recommended early elections May 9, two years before schedule, but protesters that have staged daily protests since last week have demanded elections even sooner.

The Left-Green Movement has surged in opinion polls as the effects of the global financial crisis has continued to impact the North Atlantic nation of some 320,000 people.

The economy is facing severe contraction and unemployment is due to rise sharply.

Interest rates are at 18 percent and the country recently secured a $2.1-billion bridging loan from the International Monetary Fund (IMF).

Mark Flanagan, mission chief for Iceland at the IMF, said in a statement after Haarde’s resignation that “an IMF programme supports good policies, not particular political parties or coalitions”.

“As long as appropriate policies are in place in Iceland, such support can continue. A mission will visit Iceland in mid-February to conduct the next review under the programme,” he added.

Haarde, 57, last week said he was suffering from cancer and was to step down as leader of the Independence Party at the party conference in March.

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