Reykjavik hopes to lead Iceland into the European Union by 2012. An EU official said that next week the European Commission will recommend that the bloc begin the accession talks.
The economically beleaguered nordic island of 320,000 people applied last year after the global financial storm had ripped through its banking system.
But gaining EU membership will partly depend on Reykjavik satisfying Britain and the Netherlands, who say Iceland owes them for repaying savers who lost money in Icelandic accounts.
The prime minister recently has been lobbying Brussels in hopes of drawing clear lines between the Icesave debt, badly needed economic aid and future EU membership prospects.