IMF insists Ireland got a 'good deal'

 

The head of the International Monetary Fund’s (IMF) mission to Ireland Ajai Chopra has described the €85 billion bailout package as a “very good deal for Ireland”.

He said the 5.8 per cent average interest rate is “clearly much better than one could get if Ireland had to borrow on the market right now.”

Speaking on RTÉ’s Morning Ireland, Mr Chopra said the whole idea of the EU-IMF bailout package for Ireland announced last night was to get the State borrowing again on the international markets as soon as possible.

He said the use the State’s contribution of €17.5 billion from the National Pension Reserve Fund and cash held by the National Treasury Management Agency is “a smart move”.

“It’s making the best use of the money that Ireland has set aside and given current circumstances its as sign of strength, it lowers what Ireland needs to borrow.”

He said international experts will work with the Irish authorities over the coming months to design a series of stress tests to “look more deeply” at the banks. And he said it is too early to speculate on whether or not more money would be needed.

“Let these tests get done, lets see what the results are, we’re confident that they are going to be done in a stringent and careful way and I don’t think we need to speculate on these things.”

Mr Chopra said even with a change in government, the objectives of the package will remain the same.

“To the extent that there is agreement on the objectives I’m quite confident that we can get agreement on the specific policies that any new government might have given its own priorities to get to those objectives," he said.

“We’ve been involved in countries and devised programmes with countries on the eve of elections and the experience has overwhelmingly been that even after an election given the sense of common purpose, which is particularly striking in Ireland, that one can continue to proceed.

“In terms of the specifics we leave this to the country authorities. We work with them in devising the overall strategy, we work with them in how they can make the strategy operational, there is always going to be a number of nitty gritty details and these will have to be left to the experts on the ground who know Ireland.”

He also said the IMF would be “very happy” to work with any new incoming government and to listen to their different policy priorities.

“If there’s a need for a change in specific policies to get to those ultimate objectives we would be very pragmatic and flexible in looking at that.”

Mr Chopra added that the objectives under the programme were to downsize and recapitalise the banking system, to pursue fiscal consolidation.

“We have discussed a particular route, there may be other routes of getting there, as long as they are efficient as long as they are not going to be hurting the poor we will certainly work with any government on those objectives,” he added.