Iceland signals more open to IMF help

REYKJAVIK (Reuters) - Iceland signalled on Sunday it was growing increasingly open to the idea of seeking International Monetary Fund help to pull the country through its worst economic crisis.

As Icelandic officials prepared to depart for Moscow this week to begin negotiations for an emergency loan from Russia of potentially billions of euros, a top minister gave Iceland's strongest signal yet that it was ready to turn to the IMF.

"My conclusion is that if we appeal to the IMF, other central banks and other nations would follow that track," Industry Minister Ossur Skarphedinsson told the Morgunbladid newspaper in a report published on its Web site on Sunday.

Skarphedinsson said that would give Iceland a chance to rebuild its foreign currency market swiftly and would "strengthen our own currency and ensure a considerable cut in interest rates."

When the financial crisis took hold this past week, Iceland at first downplayed the idea of seeking help from the Washington-based lender.

Countries typically avoid going to the Fund for money, both as a point of national pride and to avoid the conditions the organisation may impose on them in return for much-needed cash.

As Iceland was forced over the past week to take over one major bank after another, to shut down its stock market and to abandon attempts to defend its free-falling currency, Prime Minister Geir Haarde showed more willingness about going to the IMF, calling it a definite possibility.

On Friday, Haarde said Iceland would not take a decision while the finance minister was in Washington for the annual IMF meetings taking place at the weekend.

Many in financial markets believe that ultimately the crisis-stricken country will have little choice but to borrow from the Fund. On Thursday, the IMF said it had activated emergency plans to provide lending to countries in crisis.