UPDATE 1-Thousands protest against Iceland repayment bill
(Adds PM comment in the FT, background)
REYKJAVIK, Aug 13 (Reuters) - About 3,000 people protested outside the Icelandic parliament on Thursday against a proposal to guarantee repayment to Britain and the Netherlands of funds lost in Icelandic bank accounts, police said.
The bill, called "Icesave", would allow Iceland to reimburse Britain and the Netherlands after they compensated savers who lost billions of pounds and euros in deposit accounts last year when the small North Atlantic island's top banks collapsed.
The global financial crisis hit Iceland in October, ending a decade of prosperity in a matter of days. The currency and financial system collapsed and the then-ruling coalition government resigned in January.
InDefence, the organisation behind the peaceful protests outside parliament, said it wanted "a fair Icesave agreement that Iceland can afford to pay".
But the controversial bill is mired in parliamentary committees, with opposition parties as well as members of the coalition government calling for amendments.
"Parliament is looking into ways to attach conditions to the state guarantee to ensure the economic survival and sovereignty of Iceland," Iceland's Prime Minister Johanna Sigurdardottir said in an article in the Friday edition of the Financial Times.
"The amount to be shouldered by Iceland is huge -- about 50 percent of our gross domestic product," she said.
"Assets against this debt will substantially lower the net amount, but there is much uncertainty about the valuations and forecasts underpinning such calculations."
She said Icelanders were willing to make sacrifices to secure normal relations and trade with the world, but angry at having to take on the burden of compensation for the Icesave savings accounts of failed privately owned bank Landsbanki.
Among speakers at the protest was author Einar Gudmundsson, who said Icelanders were being punished for acts of a private company -- "a crime we as a nation had nothing to do with".
(Reporting by Omar Valdimarsson; writing by Veronica Ek and Anna Ringstrom; editing by Michael Roddy)
