The Minister of Finance has decided, in light of the improved cash position of the Treasury, to increase the amount of foreign debt that is to be repaid during the year, in addition to what had previously been decided. In the month of May, 100 million US dollars of short-term debt will be retired in addition to previously announced repayments this year.

The debt obligations that are to be repaid will mature in the period from May 13th to May 27th. The Ministry of Finance has requested to purchase 100 million dollars from the Central Bank of Iceland for this purpose. This is equivalent to 6 bn. ISK.

It was stated in the Monetary Bulletin of December 2004 that in order to meet the Treasury’s currency requirements for its foreign debt service requirement for 2005, beyond the regular currency purchases that year, the Central Bank would purchase currency in the domestic interbank FX-market. It was also stated that the arrangement of the purchase would be announced in advance to market participants. In line with this and the Treasury’s specific plans, described above, the Central Bank has decided to purchase foreign currency in the interbank market through five transactions, 20 million US dollars each time on the following dates; May 12, 17, 19, 23, and 25. The Central Bank will request quotes from market makers for these amounts before the market opens on the above mentioned dates.

There are no plans for further purchases of foreign currency for the purpose of Treasury foreign debt servicing this year.

For further information, contact Governor Eiríkur Guðnason, tel 569-9600.

Nr. 11/2005

May 2, 2005