A delegation from Iceland arrived in Moscow in mid-October for a series of meetings to agree the terms for a loan that would allow Iceland's government to shore up its shaky national currency, the krona, which collapsed after the country was forced to nationalize its three main banks after they amassed debts of over $60 billion.

With the sub-Arctic island's population of only 320,000, the banks' debt is equivalent to $187,000 per person.

Iceland's Central Bank said on October 7 that Russia had agreed to grant it a 4 billion euro ($5 billion) loan. Kudrin earlier said Russia viewed Iceland's loan request favorably, but that a decision on whether to grant the loan would only be made after talks.

Iceland's Central Bank said the duration of the loan would be three to four years, carrying interest ranging from 30 to 50 basis points over LIBOR.

With debts some 12 times larger than the national economy, which is expected to contract by 10% in 2009, the bank said the loan would significantly bolster Iceland's foreign exchange reserves, strengthening the stability of the krona in the face of the financial crisis.

The International Monetary Fund has agreed to provide a $2.1 billion loan to Iceland.