By Judith Ugwumadu | 19 December 2014

Iceland has paid back $400m to the International Monetary Fund ahead of schedule, as the country continues to recover from the economic crisis it faced during the 2008 credit crunch.

The repayment amounts to a fifth of the $2.1bn received from the IMF when its banking sector collapsed in 2008.

Under the stand-by arrangement, the original repayment was scheduled for 2015, but the fund said early repayment would help to reduce the country’s debt to about $345m. The remainder is due to be repaid in 2015/16, following other early repayments made in March and June 2012.