Iceland says signs Icesave likely to delay IMF aid

Iceland's economy minister said on Wednesday there were signs the country's IMF-led aid package would be delayed after a hitch in a deal to repay the UK and the Netherlands money lost in the island's banking collapse.

Economy Minister Gylfi Magnusson also said the centre-left government was "very far" from a solution which could lead to a new repayment deal and allow the government to cancel a planned referendum in Iceland on the issue.

"Obviously the Icelandic government is trying everything it can to prevent a delay (to the IMF programme), but I think the odds are against us" Magnusson said in a Reuters interview, pointing to delays last year due to the drawn-out dispute.

"And unfortunately there are indications that something like that might happen again now."

Magnusson said a delay in aid payments could dent investment and growth while creating the need for further fiscal austerity.