IMF Chief Chopra Admits New Irish Government COULD Renegotiate Bailout Deal

THE HEAD OF THE IMF’S delegation to Ireland, Ajai Chopra, has said any new government can seek to renegotiate some of the terms of the agreement.

Describing the terms of the €85bn bailout deal as offering “a very good deal for Ireland in current circumstances”, Chopra told RTÉ’s Morning Ireland that the forthcoming general election should see parties “come up with their own manifestos and their own priorities” – and declared the IMF willing to negotiate with any new government on the goals of the agreement.

Those goals, he said, were the reduction of unemployment, promoting new job creation, and the creation of a sustainable banking sector.

“Different governments will have different policy priorities. We are very happy to work with any incoming government… [we are] all focussed on the same ultimate objectives.

“If there is a need for a change in specific policies, we will be very pragmatic and flexible in looking at them.

“There may be other routes that get you there. As long as they’re efficient – they’re not going to be hurting the poor – we will certainly work with any government on those objectives.

“Specifics are left to a country authorities… there will always be some nitty-gritty details and these have to be left to the experts on the ground.”

First review in March

Chopra added that the IMF’s first tri-monthly review of the progress of Ireland’s return to recovery would take place in March – meaning that the terms of the funding agreement could be reviewed and renegotiated by a new government almost immediately after they take office following a New Year general election.

The purpose of the programme, Chopra said, was creating an environment in which Ireland could return to the open borrowing markets – and any individual policies helping to reach that goal would be considered.

Asked whether the reduction in the minimum wage had been an IMF proposal, Chopra said that the terms of last week’s four year budget plan had all been based on the government’s own initiative, firmly declaring: “No, we did not propose it.”

Remarking that minimum wage workers tended to work in the services sector, however, Chopra suggested that the cut to the wage – down by €1 to €7.65 per hour – could help to stimulate job creation.

Chopra said the finalisation of the bailout fund might take “a couple of months”, with the IMF bringing in international consultants to conduct new stress tests for the banking sector described as “indeed the weak spot in the economy”.

The proportion of the total €85bn fund being allocated to bank recapitalisation and government spending, he said, could be adjusted as needed – thus removing any risk that the amount being provided may not be enough to repair the ailing banking sector.