By Patrick Lannin
REYKJAVIK, Feb 1 (Reuters) - Iceland's new centre-left government will make a reduction in high interest rates one of the top priorities in forthcoming talks with the International Monetary Fund (IMF), the new finance minister said on Sunday.
Steingrimur Sigfusson, leader of the Left-Green Party, which has formed a coalition government with senior partner the Social Democratic Alliance, also told Reuters he wanted to speed up the refinancing of Iceland's bankrupt banks.
"We really want to see interest rates go down, so that would be a high priority to discuss. How soon and how quickly can we see interest rates coming down," he told Reuters in an interview.
Officials from the IMF, which last year led a $10 billion rescue for Iceland, are due in Reykjavik in mid-February for a review of the economic programme agreed with the island.
Under the programme, the central bank has raised interest rates to 18 percent in order to help stabilise the crown currency, which has plummeted during the crisis.
The Left-Green Party had been uneasy about the IMF programme but the new government has pledged to stick to it.
"We were critical and warned that some of the terms might be very tough and that is still the case," he said.
Another priority is to get the financial sector back into shape. One of the main causes of Iceland's woes was the fact that its three banks collapsed under a weight of debt after years of expansion and borrowing abroad.
The banks were nationalised and small domestic operations created. But a lack of clarity about what their liabilities are has delayed their return to lending to domestic firms.
"According to the IMF programme we have a certain sum on hold to refinance the banks," he said.
"The problem is that they have not been able to finalise their book-keeping because of the lines between the old and the new banks and other things. We will try to find some quicker methods to get them going on a temporary basis," he said.
One issue that has come up during the crisis is whether Iceland should keep its crown currency.
"Let's look at all the possible options: to keep the krona, the unilateral adoption of some currency, a union with someone, most often we are speaking about Norway," he said.
"The fourth option is going with the EU or trying to adopt the euro, but we know that is a long-term process," he added, noting the crisis and budget woes had taken Iceland further away from the economic criteria to be met to adopt the euro. (Reporting by Patrick Lannin; Editing by Charles Dick)