IMF: Move debt burden to bondholders

It is unfair to impose bank losses on the ordinary citizens, and budget cuts in a time of crisis should be gradual — these are the two main lessons arising from Ireland’s bailout programme, according to the IMF’s Ajai Chopra.

“It is unfair to impose the burden of supporting banks primarily on domestic taxpayers while senior unguaranteed bank bondholders get paid out,” he said.

“This not only adds to sovereign debt, but it also creates political problems, making it harder to sustain fiscal adjustment.