Ajai Chopra: bailout has flexibility

The bailout conditions agreed between Ireland and the EU and IMF are likely to get more restrictive over time, despite official assurances that there is "room for discussion" around the specifics, according to a senior source briefed on the matter.

According to the source, who has had contact with senior IMF officials, any slippage in carrying out the programme will result in tougher modifications to the plan.

The terms of the memorandum of understanding, which lays out the programme for Ireland's financial support, are expected to become increasingly inflexible with each quarterly review, as IMF officials achieve a finer understanding of the country's problems, the source said.

Last week Ajai Chopra, the IMF's deputy director for Europe, said the bailout had some flexibility depending on how Ireland progressed.

"Very often things can happen that are beyond the control of the authorities and that policy does need to be adapted, which is why we have these reviews," Chopra told RTÉ. "We cannot be completely rigid. What really matters is meeting the longer term objectives."

Chopra also acknowledged that the next government might have different policy objectives and that these would need to be discussed.

Fine Gael, whose members voted against the bailout memo last week, has suggested a new government could renegotiate the loan package's 5.8% interest rate. Fine Gael leader Enda Kenny has also said he wants to force losses onto holders of €17bn in unsecured bank bonds.

On Friday, IMF managing director Dominique Strauss-Kahn dismissed talk of reopening negotiations and said he was confident any new government would abide by the agreement.

An IMF report published the same day expressed concerns that Ireland's financial problems were big enough to sink the entire international rescue fund. The report said "inten­se pressures" facing Ireland entailed "substantial risk" the IMF would not get its money back.