By Agency Reporter

Wednesday, 8 Dec 2010

BRUSSELS : European Union finance ministers formally adopted Ireland‘s ¤85bn ($114bn) bailout plan on Tuesday, hours before the Irish parliament was to vote on an austerity budget.

Ministers from the 27 European Union nations ”adopted a decision providing financial assistance to Ireland and a recommendation setting out the conditions” that Dublin must meet in exchange for financial aid, the EU said.

According to AFP on Tuesday, Irish finance minister, Brian Lenihan will deliver a 2011 budget that will contain a combined ¤6.0bn ($8.0bn) of taxation hikes and spending cuts.

An EU source told AFP that the aid was ”not conditional” on the budget passing, but that it was ”obviously quite crucial.”

A protester mounted a crane outside the Dail (parliament) on Tuesday morning, with opposition politicians accusing Prime Minister Brian Cowen of selling Irish sovereignty to Brussels and Washington.

In a statement, the conditions were depicted as ”an overhaul of Ireland‘s banking system, growth-enhancing reforms and the reduction of Ireland‘s government deficit below three per cent of gross domestic product by 2015, extending a previous 2014 deadline.”

Lenihan will set out the first in a series of budgets to implement a total fiscal correction of ¤15bn over the next four years.

The deal with the EU and the International Monetary Fund for ¤67.5bn in external loans and guarantees, plus ¤17.5bn taken mostly from Ireland‘s public pension fund, has angered citizens.

The first transfers will be used to shore up Ireland‘s banking system, battered by the global financial crisis, a property bubble bursting and the deepest recession since the 1930s.

Ten billion euros will be “used immediately to recapitalise Irish banks” with a ¤25bn contingency reserve, while ¤50bn will ”cover the financing needs of the Irish government‘s budget.”

 

Source: Punch