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Kojiro Sasaki
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Ireland will request EU and IMF bailout package
Ireland will request an EU and IMF bailout of up to £80 billion on Monday as it prepares to unveil a four year programme of steep tax rises and deep spending cuts.
Brian Lenihan, the Irish finance minister, has indicated Ireland's 12.5pc corporation tax rate - the lowest in the eurozone - will not be raised Photo: AP
By Bruno Waterfield, in Dublin 2:09PM GMT 21 Nov 2010
Brian Lenihan, the Irish finance minister, refused to be drawn on the exact size of the EU-IMF loan, saying only that it would be “tens of billions” but less than €100billion (£85bn). “I will be recommending to the government that we should apply to a programme and open formal negotiations,” he said. “Certainly, it will not be a three-figure sum.”
Mr Lenihan said that the country was running a deficit of over £16billion which it could not afford to finance at current market rates amid concerns about the solvency of Irish banks. He described the loan as "a standby fund" and said not all of it would necessarily be drawn down. Ireland's cabinet held emergency talks on Sunday afternoon to finalise crisis austerity plan for 2011 to 2015 after EU and IMF officials checked the government books line by line over the weekend.
A 30 strong team of European Central, Commission and IMF inspectors are working around the clock to vet the Irish government’s figures and spending plans for the next four years. Negotiations have been tense as the EU and IMF impose tough conditions to force Ireland to cut public expenditure further and to increase taxation on the vast majority of people. Ireland is also being forced to increase its corporation tax in return for a loan as popular anger of the country’s loss sovereignty grows.
France, Germany and other EU countries have moved to force Ireland to abandon its low corporate tax rates as a condition for aid to fix its debt crisis. “Faced with a situation like this, there are two levers they can pull: spending and receipts. I cannot imagine that our Irish friends would not use this because they have more room for manoeuvre than others, their taxes being lower than all the others,” said Nicolas Sarkozy,t eh French President on Saturday.
Mr Lenihan insisted: "The rate is not on the agenda." Ireland’s four-year recovery plan is expected to published on Tuesday, the 160-page document will aim to cut £13billion (€15bn) between 2011 and the end of 2014. Trade unions are warning of “civil unrest” on scale not seen for decades as the Irish government, under EU pressure, axes tax breaks for the low paid and middle class families in order to increase state revenue.
Jack O’Connor, the president of the Irish congress of trade unions, attacked has plnas to reduce the minimum wage by one euro to €7.65 (£6.55). “Brazenly, they are exploiting the weakened position of the Government to oblige the most vulnerable in society, and middle and lower-income families, to shoulder the burden of adjustment while they escape scot free,” he said.
The EU and IMF team, nicknamed the “bailout boys”, is staying in a luxury Dublin hotel and working amid tight security because of fears that they will become the focus of Irish protests. Resentment has grown after one European Commission official described tough conditions attached to the EU-IMF bailout as the “Oliver Cromwell package” a reference to the Lord Protector of England, still hated by many Irish, for his bloody re-conquest of Ireland in 1649.
Father Sean Healy, a Catholic priest who leads a pressure group called Social Justice Ireland, is concerned that the EU and IMF will push Ireland into beefed up austerity programme that will hit the poor “The IMF and the government have created a situation where most of the adjustments will be made at the expense of the weak, the sick, the vulnerable and the working poor,” he said.
