Unfair to bail out senior unguaranteed bondholders over taxpayers - IMF's Ajai Chopra

Friday 20 December 2013 09.25
Ajai Chopra is set to retire from the IMF after 30 years at the organisation
Ajai Chopra is set to retire from the IMF after 30 years at the organisation

It was unfair to impose the burden of supporting banks on Irish taxpayers while senior unguaranteed bank bondholders were paid out, the IMF's Ajai Chopra has said.

Mr Chopra, the International Monetary Fund's former mission chief for the country's bailout, made the comments in the organisation's final review of the country’s bailout process.

He said that, looking back over the programme, a number of things should have been done differently, including the way some bondholders were treated.

He also said the country should have made more rapid progress in dealing with mortgage arrears - where almost one in five borrowers are currently behind in repayments.

Overall the IMF said the Irish economy was picking up steam, but cautioned that the Government must maintain budget rigour to reduce a debt pile that remains among Europe's largest.

In the detail of its final review, released following officials' visit to Dublin last month, the IMF praised Irish persistence in sticking to the programme terms.

"Ireland must maintain determined efforts to address its high public debt and deficit levels, heavy private sector debt burdens, financial sector repair needs, and substantial long-term unemployment before it can be judged to have fully recovered from the crisis," the IMF said.

The IMF cut its forecast for 2013 GDP to 0.3%, from a previous 0.6%, but that was before new data showed that the Irish economy accelerated in the third quarter.

For next year, the IMF sees economic expansion of 1.7% and about 2.5% from 2015.

"Ireland has achieved a tremendous amount in the three years since the EU/IMF-supported programme began in December 2010,"Chopra said. "Remember that this period included threats to the very existence of the euro area, making Ireland's achievements all the more impressive."

Ireland should be helped for exiting bailout - Schulz

The President of the European Parliament, Martin Schulz, has said Ireland should helped rather than punished for the “huge achievement” of emerging from its EU-IMF programme.

Speaking in Brussels, Mr Schulz said the debt burden shouldered by the Irish people, in rescuing its banks, had prevented a “domino effect” which could have collapsed the European banking system.

He said he, and the other members of the European Parliament, would like to see the promises made to Ireland regarding debt assistance now being honoured.

Mr Schulz said MEPs "know that the sacrifices that have been made by the Irish people" and there was "every respect for what the country has done."

He told a news conference: "Ireland is emerging from the programme, so we have to help Ireland to bring about the re-stabilisation of its economy and its State budget." 

He added: "You are emerging from the programme stage - this is a major step forward. They [the Irish] are not out of the woods yet, but this is a big step forward that Ireland has taken."