IRELAND'S bailout is on track and Greece does not need to restructure its debt, according to the acting head of the IMF.
Acting IMF chief John Lipsky took the helm at the organisation after the arrest of Dominique Strauss-Kahn.
Yesterday, he told a press conference in London that Ireland's economic recovery appeared to be on track. He said there was no plan for a Greek debt restructuring. "Right now the [Greek] programme that we are supporting, that has been approved and which the latest package is intended to put back on track, does not contemplate debt restructuring," he said.
Jean-Claude Juncker, the head of the group of 17 eurozone finance ministers, said that while "there are no obvious signs of potential growth" in Greece, Ireland was a different story. "You can't say for instance that Ireland has been badly run over the long run," he said.
Mr Lipsky's comments come as debate rages between European policymakers on how to make sure banks that own Greek government bonds share some of the burden of the next stage of the Greek bailout.
On Friday, the IMF, European Central Bank (ECB) and European Commission signed off on the next instalment of bailout loans for Greece. The three lenders said they would back an extension to the current €110bn Greek bailout.
Unlike the original Greek deal, or the Irish and Portuguese bailouts, the new deal will include a private sector dimension.
That means banks that hold Greek bonds will play some role in the new bailout -- most likely by re-lending to Greece as old debts fall due.
How that will work has yet to be agreed, but yesterday's comments appear to rule out forcing losses on the bank or changing the terms of their loans.
The ECB is already firmly opposed to debt restructuring. Yesterday, its executive board member Lorenzo Bini Smaghi said sovereign debt restructuring should be a last resort.
"More often than not, restructurings have been disorderly, harmful and fraught with difficulties," Mr Bini Smaghi said.
Domestic financial markets, the real wealth of populations in any country that defaults, and governments' ability to fund key functions would all be affected, he said.
"Imposing haircuts on private investors can seriously disrupt the financial and real economy of both the debtor and creditor countries", and "this is why such restructuring should only be the last resort."
The comments come in the middle of the debate on bailing out lenders to Greece.
The heart of the debate on involving banks in the Greek bailout is between two main camps. The ECB wants banks to voluntarily roll over Greek bonds as they mature, possibly on new terms. Under that proposal, no changes would be imposed on the terms of outstanding loans.
In the opposite camp, Germany and a number of other countries would prefer to see banks themselves extending the maturity date on bonds they hold.
The difference is somewhat academic but one case involves restructuring debt while the other technically involves fresh, private-sector loans.
Yesterday, ratings agency Fitch said it would consider a Greek debt swap that left banks "worse" off than from the existing securities would be considered a "coercive" or "distressed" exchange and would be regarded as a default.