Tuesday 21 October 2014

Imposing bank losses on Irish 'unfair'

Published 20/12/2013 | 02:30

Ajai Chopra from the IMF

IT was unfair for Irish taxpayers to suffer the cost of bailing out the banks when senior bondholders got their money back, Ajai Chopra, the former IMF Ireland reviewer has said.

In an IMF-conducted interview marking the final review of Ireland under the bailout, Mr Chopra said imposing losses on taxpayers not only added to sovereign debt but created political difficulties. And he put the blame on Europe.

"Eurozone partners precluded the Irish from imposing haircuts on senior creditors of insolvent banks," Mr Chopra said. "But subsequent developments in the principles of orderly resolution of banks, after Ireland had paid off these creditors at great cost, have shown that imposing losses on senior bank bond holders is now becoming more accepted."

In the same interview, Craig Beaumont, the current mission chief to Ireland, said the bailout was a "dramatic shock" for the Irish people.

"There was also disappointment in Ireland that the programme did not provide a more immediate turnaround in the economic situation," he said.

"For example, unemployment kept on rising until it peaked in early 2012, though it has declined more recently.

"But the programme did avert a sharper deterioration in the economy, which was likely given the deep loss of domestic and external confidence at the end of 2010, especially in the banking system."

The interview also revealed that Mr Chopra is leaving the Washington-based lender to pursue other interests, including volunteering.

COLM KELPIE

Irish Independent

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