WASHINGTON, Oct. 24 (Xinhua) -- The International Monetary Fund(IMF) announced Friday an initial agreement with Iceland on a 2.1 billion dollar two-year loan to support an economic recovery program to help the island restore confidence in its banking system and stabilize its currency.

    Following review by the IMF's management, the agreement could be presented to the IMF Executive Board for approval in early November. Iceland will be able to draw 833 million dollars immediately after board approval.

    "Iceland has put together an ambitious economic program, which aims to restore confidence to the banking system, to stabilize the krona through strong macroeconomic policies, and to help the country achieve medium-term fiscal consolidation following the collapse of its banking system," said IMF Managing Director Dominique Strauss-Kahn.

    "I believe these strong policies justify the high level of access to fund resources -- equivalent to 1,190 percent of Iceland's quota in the IMF -- and deserve the support of the international community," he said.

    "The authorities' program is focused on the essential upfront measures needed to restore confidence and economic and financial stability. The overarching goal is to support Iceland's effort to adjust to the economic crisis in a more orderly and less painful way," said the IMF chief.

    The IMF, which has announced its readiness to lend billions of dollars to support nations hit by fallout from the global financial turmoil, is holding talks with several countries about possible new lending programs, as well as advising governments how to react to the economic downturn.

    The IMF has more than 200 billion dollars of loanable funds and can draw on additional resources through two standing borrowing arrangements with groups of IMF member countries.