Category: news

The extent of Irish spending cuts – and any Europe-led bail-out – will be known soon

The Republic of Ireland is set to receive a bail-out package bigger than that given to Greece, a report says.

The international rescue deal will be worth up to 120bn euros (£102bn; $164bn), compared with Greece’s 110bn euros, the Sunday Times reported.

But the country’s Europe Minister, Dick Roche, said he had seen no information to substantiate such a figure.

The government is holding a cabinet meeting on Sunday to finalise a four-year plan to cut its budget deficit.

Only after this is done would a bail-out off from the European Union, the European Central bank and the International Monetary Fund be forthcoming.

Ahead of the meeting, Mr Roche told the BBC that mistakes had been made in Ireland, and that there had been “criminality” at the country’s banks which “would have to be dealt with”.

“There were bad mistakes made they weren’t just made in this country the were made elsewhere,” he said.

But he added: “We have been through worse as a nation. We are a very resilient race and we will come out of this.”

Greece received its bail-out – payable over three years – in May this year in the form of loans made to the government and its banking sector.

It was contingent on sweeping spending cuts and other austerity measures. Any bail-out offered to Ireland is set to have similar requirements.

Various newspaper reports suggest that Irish proposals to bolster the country’s balance sheet will include a property tax worth about 500 euros per home, and a wealth tax on the richest in the country.

A string of further public sector spending cuts is also expected.

However, the Irish government has insisted it will not raise the country’s low corporation tax rate in return for a European Union-led bail-out.

Last week Deputy Prime Minister Mary Coughlan said the 12.5% rate – much lower than the EU average – was “non-negotiable”.

And the Sunday Telegraph reported that some of the biggest US companies had warned the Republic of the “damaging impact” if the corporation tax was raised.

Microsoft, Hewlett Packard , Merrill Lynch and Intel were among those to warn of the risk to the country’s “ability to win and retain investment” the paper said.

Two key areas will form the basis of the cabinet’s discussions, said BBC business correspondent Joe Lynam:

The country’s precarious fiscal situation which has pushed the budget deficit to 32% of gross domestic productHow best to prop up the country’s enfeebled banking sector which has been frozen out of international markets and all but nationalised

The Sunday Telegraph also reported that advisers for the Irish government had been talking to banks it felt may be in a position to buy large stakes in either Anglo Irish Bank or Allied Irish Bank – both of which the government holds stakes in.

On Friday, Allied Irish Banks said 13bn euros of deposits had been withdrawn this year, mostly from businesses and institutions – implying that the bank does not face a run by ordinary depositors.

Although the Irish government claims to be fully funded until the middle of next year, it has provided a blanket guarantee to the Irish banks, some of whom are now finding it impossible to borrow money in the markets.

On Thursday, the Irish government admitted for the first time that it needed outside help.

Previously the government had said it did not need any financial support from the European Union and International Monetary Fund.

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.