Oct. 20 (Bloomberg) -- Iceland's Industry Minister said the government is ``very close'' to agreeing on a rescue plan with the International Monetary Fund and suggested a deal will bring with it assistance from Nordic neighbors and Japan.

The fund is finalizing a plan to present to the government, which is also seeking a loan from Russia, Oessur Skarphedinsson said by telephone from Reykjavik today. The Financial Times and New York Times reported that the rescue will be worth $6 billion.

Iceland needs aid from the IMF and Nordic countries after the collapse of its banking system froze its foreign exchange market, making it hard for importers to finance purchases. Glitnir Bank hf, Landsbanki Islands hf and Kaupthing Bank hf imploded with debts of $61 billion, as much as 12 times the size of the economy.

``It's clear from our diplomatic contacts that if and when an agreement is made between the IMF and Iceland, then our neighbors would be quite willing to sail in their wake,'' Skarphedinsson said. ``We in fact have confirmation of what I would label quite generous lending facilities.''

Norway, Sweden and Denmark would probably follow any accord with the IMF, with Japan also a candidate to provide the Atlantic island with aid, he said.

``We are part of the Nordic family,'' Skarphedinsson said. ``It's really stating the obvious to say that definitely the Nordic countries would be among those that would seek to assist us through this crisis, when and if we go to the IMF.''

Nordic Family

The central banks of Denmark, Norway and Sweden in May provided Iceland with a euro swap facility worth a total of 1.5 billion euros ($2 billion). The central bank of Iceland has so far drawn on 400 million euros of that.

Skarphedinsson declined to comment on the Financial Times report, published today, that said $1 billion will come from the IMF and the remainder from Nordic governments and Japan. The New York Times said Russia will make a contribution.

The chief press officer at Sweden's central bank Britta von Schoultz declined to comment. Norges Bank head of communications said she wasn't ``aware of'' any agreement with Iceland linked to a possible IMF deal. Calls made to Danish central bank spokeswoman Louise Buchter weren't immediately returned.

Bonds of Iceland's three biggest banks are on sale for as little as 3 cents on the dollar after the government began a restructuring that may leave debt investors with nothing, according to broker KNG Securities LLP.

To contact the reporters on this story: Tasneem Brogger in Copenhagen at tbrogger@bloomberg.net;

Last Updated: October 20, 2008 15:40 EDT