Commerce minister quits in wake of crisis

AFP - Iceland's commerce minister announced his resignation Sunday, becoming the first casualty of an economic implosion after the collapse of the island nation's vital financial sector three months ago.

Bjorgvin Gudni Sigurdsson apologised for the stunning financial collapse, but refused to take all blame for the dramatic events that ensued.

"I accept my part of responsibility in the collapse of the banking sector even if numerous other people have their share of responsibility," he told a press conference.

"I am very sorry for what happened to the Icelandic financial sector," said Sigurdsson, a Social Democrat who became minister in May 2007.

His decision to step down also led to the resignation of Jonas Jonsson, director at the Financial Markets Authority, which falls under the commerce ministry.

Iceland's foreign minister, Ingibjorg Solrun Gisladottir, told media Sunday that Sigurdsson's resignation was unexpected and it was too early to tell who would replace him.

"Truthfully, it came as a surprise, when he called me this morning. Not least because he has done well in his ministry," said Gisladottir, leader of the Social Democrat Party and the second highest ranking member of government.

Sigurdsson said he had held on to his position, despite numerous calls he resign, to try to convince the population that the government had made the right decisions in recent months.

When the North Atlantic nation of just 320,000 people saw its once booming financial sector collapse, the government was forced to step in and take control of three major banks.

Icelanders took to the streets in protest as increasing numbers lost their savings and jobs.

Thousands of people demonstrated in Reykjavik on Saturday calling on the embattled government to step down immediately, despite its announcement of early elections -- for May 9 -- the day before.

Gisladottir was set to meet with Prime Minister Geir Haarde on Sunday to discuss the future of the current two-party coalition, which has taken a dive in polls favouring the creation of a Left-Green coalition.

The foreign minister would try to persuade Haarde to dismiss his finance minister and top officials from the central bank, government sources said.

These central bank officials would include David Oddsson, the former prime minister who also oversaw a liberalisation of the banking sector in the 1990s, they said.

Haarde has up until now resisted political and popular pressure to dismiss Oddsson.

"I cannot say anything on the subject for the moment," Haarde said Sunday when questioned on whether Oddson would step down.

"It is important to control the country firmly and those who are prepared to do so are welcome around the table," he said.