Polls have closed in Iceland's parliamentry election and with nearly 20 percent of the overall votes counted, the centre-right parties who promised tax cuts and debt relief have taken a commanding early lead.

The Independence and Progressive Parties, which ruled the nation, often in coalition, for nearly 30 years before the 2008 collapse, had collected close to half the votes counted so far on Saturday, putting them solidly ahead of the ruling Social Democrats and on track to form Iceland's next government.

The Independence Party, which was part of every government between 1980 and 2009, led with 24.9 percent, and the Progressive Party was close behind with 22.7 percent, while the Social Democrats were a distant third with 13.9 percent.

With a population of just 320,000, Iceland became a European financial hub 10 years ago when its banks borrowed money cheaply and lured British and Dutch savers with high returns.

Growing unchecked under a relaxed regulatory regime, the banks expanded to 10 times Iceland's GDP by 2008, then crashed in a matter of days, leaving behind a long trail of debt and bankruptcy and foreshadowing the trouble many other European nations would face.

The Social Democrats stabilised the economy with a package hailed as exemplary by the International Monetary Fund, but a series of policy blunders, tax increases, leniency towards foreign creditors and inability to deal with soaring household debt cost them their popularity.

Source: Al Jazeera And Agencies