Iceland to set up bad debt vehicle, tap pensions

By Omar Valdimarsson

REYKJAVIK (Reuters) - Iceland's new centre-left government unveiled a package of measures on Tuesday to help the country out of an economic crisis and renewed its call for the central bank chief to step down.

Prime Minister Johanna Sigurdardottir told a news conference the government planned to create a separate company to take over debts owed by 15-20 of the biggest companies which have run into financial difficulties due to the crisis.

The minority government said it would also present a bill to parliament allowing Icelanders access to funds in private pension plans which they would not otherwise been able to use until retirement.

Sigurdardottir, whose coalition cabinet won power after the previous coalition government fell apart in the face of public protests last month, also renewed her demand that Icelandic central bank governors step down.

"We are experiencing growing loss of confidence in the (central) bank at home and abroad. That is why I asked the governors to step down," she said.

"The current situation is hurting us abroad."

Central bank Governor David Oddsson, who many Icelanders blame for failing to avert the crisis that led to the collapse of the country's main banks and currency last year, refused to resign in a strongly worded public letter at the weekend.

But the coalition government, which is to hold office until a new government is in place after an early election seen in the coming months, has said reshaping the central bank is a priority and has unveiled plans to change the bank's structure.