Business Banking Inquiry

Saturday 1 October 2016

You paid too much for bailout: Chopra

Clodagh Sheehy

Published 11/09/2015 | 02:30

Ajai Chopra, former deputy director of the IMF leaves the inquiry
Ajai Chopra, former deputy director of the IMF leaves the inquiry

Ireland paid too much for the bailout because the EU wouldn't let the country burn bondholders, the IMF chief who designed the rescue plan says.

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Ajai Chopra, former deputy director of the International Monetary Fund, said the European Central Bank was wrong to issue an ultimatum to Ireland and pushed the country's public debt higher than it needed to be.

"Ultimatums are not the right way to do business," he told the Banking Inquiry. Burning the bondholders, which the ECB would not permit, could have made a sizeable cut in Ireland's debt, Mr Chopra said.

Europe's decision to veto the burning of senior bondholders meant a "higher burden for Irish taxpayers and a higher public debt", he said.

Mr Chopra said there might have been about €16bn outstanding to senior bondholders when the bailout programme started.

"As a rule of thumb, if you discounted those by half, you get about €8bn, which is several percent of GDP," he said,

"I think it could have been a sizeable contribution - yes."

Irish Independent

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