Iceland Prime Minister 'not resigning' over Panama Papers, just stepping aside for ‘unspecified amount of time’

'The Prime Minister has not resigned and will continue to serve as Chairman of the Progressive Party'

Iceland's Prime Minister Sigmundur David Gunnlaugsson talks to media outside the residence of Iceland's President President Olafur Ragnar Grimsson after a meeting of the two in Reykjavik (EPA)

The Prime Minister of Iceland has said he has not resigned but has simply stepped aside for a period of time, according to a press release from his office.

It comes after the leak of the “Panama Papers” from Panamanian law firm Mossack Fonseca, which reportedly show that Sigmundur David Gunnlaugsson and his wife Anna Sigurlaug Palsdottir had an offshore firm in the British Virgin Islands to allegedly shield investments worth millions.

The shell company, Wintris, was set up in 2007, according to the International Consortium of Investigative Journalists (ICIJ) which published the papers. But it was not declared when Mr Gunnlaugsson entered parliament two years later.

On Tuesday - two days after the papers were leaked - it was initially thought the Prime Minister had resigned.

But this was later contradicted by a statement from his press secretary.

The statement said Mr Gunnlaugsson had suggested that the vice-chairman of the Progressive Party should take over the office of Prime Minister for “an unspecified amount of time”.

“The Prime Minister has not resigned and will continue to serve as Chairman of the Progressive Party,” it said.

Olafur Ragnar Grimsson, the President of Iceland, has not yet confirmed any changes to the leadership.

On Tuesday, Mr Gunnlaugsson asked the President to dissolve parliament and call an early election. But the request was rejected by Mr Grimsson who said he first wanted to consult leaders of the ruling coalition’s Independence Party.

The Prime Minister has denied any wrongdoing and says he sold his shares in Wintris to his wife. He said he had paid his taxes and did nothing illegal regarding his offshore holdings.

The Prime Minister also said his financial holdings did not affect his negotiations with Iceland’s creditors during the country’s 2008 economic crash.

But the opposition said the holdings amounted to a major conflict of interest with his job. Wintris reportedly had $4 million in the bonds of three banks in Iceland which failed in the crisis, according to the ICIJ.

Some protestors, who suffered in austerity during the economic crash, gathered outside parliament to express their dissatisfaction with the lack of a clear resolution. Store manager Elfar Petursson said: “I’m here because the government still hasn’t resigned.”

The Panama Papers, published on Sunday, consist of more than 11 million documents and name a number of current and former world leaders who allegedly used the services of Mossack Fonseca.

There is no indication that any of the named individuals have done anything illegal.

Additional reporting by PA