Payouts will be dependent on the Icelandic economy’s progress, the four nations said in a joint statement.
The loans, which were first announced in November and have been approved by the parliaments and governments of the four countries, are in addition to a $2.1 billion bailout from the International Monetary Fund (IMF).
A North Atlantic island of just 320,000 inhabitants, Iceland suffered a major economic blow in October when its three main banks collapsed, bringing to a screeching halt a decade of prosperity as the state took over the banks.
Thousands of Icelanders lost their jobs and their savings as a result.
“Signing of the agreements does not imply immediate disbursement of the Nordic loans,” the countries said.
“Disbursement of the loans will be in four equal tranches tied to the first four reviews of Iceland’s IMF programme with the payment of each tranche conditional on the approval of the relevant review,” they said.
Iceland reached an agreement in early June with Britain and the Netherlands to reimburse funds forked out by London and The Hague to compensate those who lost money in the collapse of the online Icelandic bank Icesave.
Lack of agreement on that issue has delayed the IMF’s first review.
Iceland’s snap elections in April, which brought the leftist government to power, also contributed to the delay.
The IMF’s board is now expected to complete its first review in August, the body’s permanent representative in Iceland, Franek Rozwadowski, told Icelandic daily Morgunbladid on Tuesday.
The IMF has already disbursed about 850 million dollars, and eight tranches of $155 million each will follow each review.