Iceland surprised the international community last month by raising the possibility of a Russian loan of up to 4 billion euros ($5 billion) to help prop up its battered currency. Pankin specified that he now meant dollars not euros as negotiated initially.
An Icelandic delegation came to Moscow last month to discuss the possible deal. The loan has not yet materialized, but the Russian offer sped up the efforts of other international lenders because of worries over what Moscow might ask in return.
"Now, $4 billion is too much, and for us it is too much," Pankin told reporters. Media have speculated that the offer could be linked to a large amount of Russian stock held in Icelandic banks as collateral on corporate loans.
Iceland said Sunday that it had reached a deal with several European Union states on how to repay thousands of foreign savers with money in frozen Icelandic accounts. The European Commission said a deal that would pave the way for international aid.
Russia has been spending its reserves to prop up the ruble and support the economy, but $4 billion would still be less than 1 percent of its remaining cash pile. Russia's own bailout package for its economy and markets is worth more than $200 billion.
According to International Monetary Fund data, $4 billion equals about one-fifth of Iceland's 2007 gross domestic product. Pankin said an acceptance of banking liabilities by the Icelandic government would boost sovereign debt to more than 100 percent of the GDP.
"On the whole, we will look at how Iceland's macroeconomic problems are resolved, and whether they succeed in reaching agreement with other creditors," Pankin said, noting that Iceland's handling of its banking sector's debt was a key issue.
The Finance Ministry initially denied there was an agreement with Iceland regarding the loan in September but then reluctantly confirmed it when Iceland's central bank said the loan had been negotiated with Prime Minister Vladimir Putin.
Pankin said Russia's final decision would be influenced by the positions of other international lenders, such as the IMF, Britain, the Netherlands and Nordic countries.
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