Iceland PM calls snap election as partner quits

Bjarni Benediktsson, whose party has been accused of covering up a scandal involving his father.
Bjarni Benediktsson, whose party has been accused of covering up a scandal involving his father. Photo credit: Reuters

Iceland's prime minister has called for a snap parliamentary election after one party in the ruling coalition quit his government formed less than nine months ago.

The outgoing party, Bright Future, cited a "breach of trust" after Prime Minister Bjarni Benediktsson's party allegedly tried to cover up a scandal involving his father.

That leaves the country, whose economy was wrecked by the collapse of its banking system nearly a decade ago, facing its second snap election in less than a year.

The outgoing government would be the shortest-living in Iceland's history. The previous government was felled by the Panama Papers scandal over offshore tax havens.

"We have lost the majority and I don't see anything that indicates we can regain that. I am calling an election," Benediktsson said.

He said he would be looking to hold the election in November though that would mean it would not be possible to finish next year's budget.

It is ultimately up to President Gudni Johannesson, whom Benediktsson will meet with on Saturday, to make the decision on a new election.

If he accepts the call for an election he is likely to ask the government to stay in place until a new coalition is formed but he could also ask other parties to try form a majority. Johannesson was not immediately available for comment.

The news knocked more than 1 percent off the value of the Icelandic crown against the euro and the dollar.

The scandal revolves around a letter written by Benediktsson's father to help an old friend have his criminal record expunged after he was convicted of sex offences against children.

"The board of Bright Future has decided to terminate cooperation with the government of Bjarni Benediktsson," the party said in a statement.

"The reason for the split is a serious breach of trust within the government."