THE IMF yesterday stated in the clearest terms yet that it supported the view of the European authorities that risks to the wider financial system associated with imposing losses on senior bank bondholders was too great.
In a telephone press conference yesterday afternoon, Ajai Chopra, who led the IMF delegation to Dublin for talks on the terms of Ireland's bailout, was quizzed in some detail about the fund's position on senior bondholders.
He said: "The view of European partners has been that the systemic impact of reneging on senior bondholders would be too great."
He then said this was a common view of the IMF and the European institutions "at this point" and that the IMF had adopted this view "in consultation with European partners".
When pressed on whether he agreed that imposing losses on senior bondholders was too risky he said "yes, full stop".
When asked if that had been the IMF's position at the start of bailout process, he refused to be drawn.
When asked by The Irish Times what this meant for Fine Gael's repeated commitment to ensure that senior bondholders share bank losses, Mr Chopra referred to his earlier statements reported above.
Fine Gael finance spokesman Michael Noonan TD told The Irish Timessubsequently: "Fine Gael is aware that policy on these matters across the EU is moving rapidly and we believe there will be an opportunity to reopen the issue [ of imposing losses on senior bondholders].
"The expectation of a change in policy is already being reflected in the markets. Fine Gael has agreed that it is not possible for Ireland to move unilaterally on this issue and any change in position would have to be done in accordance with the general policy laid down by the EU, the IMF and the ECB."
On reopening other aspects of the terms of the bailout programme in the context of a change of government, Mr Chopra said that issues "can be discussed".
In response to a query from The Irish Times on the Labour Party's commitment to reduce the size of next year's budgetary adjustment of €6 billion Mr Chopra noted that the budget for 2011 is already in place.
He also said that the interest rate on mony lent to Ireland by the IMF would not change as it was the standard rate for all IMF member countries.
