Chopra expected to say ECB pushed Ireland on bailout

Former IMF official expected to criticise ECB role before Oireachtas banking inquiry

Ex-IMF official Ajai Chopra: appearing before inquiry as voluntary witness. Photograph: Eric Luke

Ex-IMF official Ajai Chopra: appearing before inquiry as voluntary witness. Photograph: Eric Luke

 

Former International Monetary Fund official Ajai Chopra is expected to tell the Oireachtas banking inquiry the European Central Bank went beyond its remit by pushing Ireland into a bailout.

Mr Chopra is due to appear before the inquiry tomorrow and is expected to criticise the role of the ECB during Ireland’s financial crisis.

He is expected to agree with the view of former Department of Finance secretary general Kevin Cardiff that when Ireland entered the rescue programme, it was pushed hard.

It is understood Mr Chopra is to claim the advice given by the ECB was specific and directly tied to conditions. He is expected to say there were consequences for non-compliance and the ECB view became a pressure point.

Mr Chopra is expected to tell the committee the letters sent by former ECB president Jean-Claude Trichet to the late minister for finance Brian Lenihan were gratuitous.

It is understood he will say the demands in the correspondence, which threatened to withdraw funding from the ECB unless a programme was agreed, went beyond the institution’s mandate.

Mr Chopra is expected tell the committee it wanted to impose losses on senior unguaranteed and unsecured bank bondholders. He is expected to say the then government was blocked by the European authorities, who feared it would affect their funding markets.

Mr Chopra is expected to say it is understandable there is a strong sense in Ireland that burden-sharing between Irish taxpayers and bank creditors has been unfair.

Between 2010 and 2013, Mr Chopra designed Ireland’s banking bailout and monitored the financial rescue programme. He is expected to tell inquiry members discussions that began with officials of the then government in late October 2010 could not be classified as a request for assistance.

Due diligence

Mr Chopra has left the IMF and now works as an academic. He is appearing as a voluntary witness. It is understood he will tell the inquiry Ireland needs to establish medium- term goals to balance the budget. He is expected to say Ireland is not immune from the risks in the euro area but is understood to be upbeat about the country’s economic prospects.

The inquiry will today hear from former adviser to the government Alan Ahearne, former Central Bank director Alan Gray and former Anglo Irish Bank executive Tom Browne.