* PM cannot rule out more rate rises; none expected but cuts depend on inflation
* Says no plans to resign
By Omar Valdimarsson
REYKJAVIK Nov 5 (Reuters) - Iceland's prime minister said on Tuesday he did not expect any further interest rate rises after a 6 percentage point hike in late October helped secure a loan deal with the IMF, but could not rule them out.
Iceland raised rates to 18 percent on Oct. 28 as part of the deal in which the International Monetary Fund has provisionally agreed to lend the country $2 billion to help rebuild its shattered financial sector and stabilise its currency.
Prime Minister Geir Haarde told Reuters he did not expect further rate hikes as a result of the IMF deal.
"But it's impossible to say categorically that there will be no changes in interest rates ... up or down," he said.
The contents of the deal, which has yet to be approved by the IMF's board, have yet to be made public.
Haarde said rate cuts would depend on getting inflation -- running at 15.9 percent in October -- under control.
He said the IMF deal projects inflation to be down to between 4 and 5 percent by the end of next year.
Iceland has seen its economy devastated by the global financial crisis.
The collapse of three of its four biggest banks could cost up to 1.1 trillion Iceland crowns ($8.55 billion) -- 85 percent of gross domestic product in 2007 -- and the economy is set to contract sharply next year, possibly by up to 10 percent.
FINANCIAL AID
Iceland has been spreading a wide net in search of funds to cope with the meltdown in its economy.
Norway said this week it would give Iceland a 500 million euro ($644 million) loan and other Nordic countries are considering a request for aid.
Iceland is also talking to other potential lenders including Russia and the European Union.
Haarde said Iceland was looking for an additional $4 billion on top of the IMF loan.
"The plan is to have funds to inject to the currency market here and to keep in reserve," he said.
"In that case firm commitments would be enough, it wouldn't be necessary to have all this money in hand, or to use it."
Haarde and central bank chief David Oddsson have been criticised by many for their handling of the economic collapse.
Haarde said he was not going to step down as prime minister.
"No, that would not be the responsible thing to do," he said.
"I see my role now as getting us through this. There is full unity in the cabinet on this point, we're not going to shirk our responsibilities and run."
Haarde repeated that despite taking over three of the island's four biggest financial players, the government would not pay back the billions of dollars the banks borrowed in recent years, partly to fund overseas expansion.
"We will not be paying the debts of private entities," he said. "The Icelandic Treasury, however, will pay every penny that it legitimately owes." (Reporting by Omar Valdimarsson via Stockholm Newsroom)