WASHINGTON, Oct 28 (Reuters) - The International Monetary Fund on Wednesday approved a long-delayed review of Iceland’s economic performance under an IMF loan program and said the crisis-hit economy could begin to turn the corner by the middle of next year.

With the approval of the first review, the IMF said it would disburse a $167.5 million loan tranche to Iceland and extend the $2.2 billion program by six months to May 31, 2011 to compensate for delays. In addition, it agreed to reschedule the remaining loan disbursements.