Ireland on knife-edge amid bailout fury; banks up for sale, PM urged to quit
Ireland’s government was on a knife-edge on Tuesday with damaged Prime Minister Brian Cowen challenging the opposition to let an austerity budget pass and trigger an EU/IMF bailout before early elections.business Updated: Nov 23, 2010 21:46 IST
Ireland’s government was on a knife-edge on Tuesday with damaged Prime Minister Brian Cowen challenging the opposition to let an austerity budget pass and trigger an EU/IMF bailout before early elections.
The prime minister defied calls to quit on Monday, saying the national interest required that he press on to unveil a promised four-year austerity package on Wednesday, and a 2011 budget on December 7 before calling an early election.
A delay in adopting the budget would almost certainly prevent the release of the first bailout loans under IMF rules.
Greece, the first country to be bailed out by the euro zone and the International Monetary Fund earlier this year and which endured months of social unrest, earned a vote of confidence from EU and IMF watchdogs on Tuesday after promising extra measures to shore up its ailing finances, to get a third tranche of its €110-billion aid package.
The Irish government is expected to announce it will cut the minimum wage, social welfare spending and the number of public employees and add a new property tax and higher income taxes in a package intended to shave €6 billion off next year’s budget, and €15 billion off the annual budget by 2014.
Trade unions have warned that the austerity plan could provoke civil unrest.
European partners and the IMF agreed in principle on Sunday to rescue Ireland with an expected €80 to 90 billion in loans to try to stop its crisis continuing to undermine the value of Ireland’s traded debt and that of countries with similar problems — notably Portugal and Spain.
Ireland’s central bank governor, Patrick Honohan, said all the countries’ banks were up for sale, adding he expected the EU and the IMF to attach many conditions to a financial rescue. “They are for sale as far as I am concerned,” Honohan said. “I’ve been an advocate for a number of years for small countries to have foreign owners for their banks.”