Monday 20 November 2017

€80bn bailout: Lenihan attempts to ease Budget fears

Ireland will not be forced into a Budget dictated by the International Monetary Fund and Europe, Finance Minister Brian Lenihan insisted today.

As formal negotiations on a multibillion bail-out begin in Dublin, the minister moved to ease fears that foreign officials will hold the State's economic purse strings.

"I'm quite satisfied on the basis of the discussions to date that the Budget that will be presented to Dail Eireann on 7th December will be our own Budget, nobody else's Budget," Mr Lenihan told RTE Radio.

"There has been no request for any change in that."

The IMF/EU rescue package is estimated to be up to €80bn.

Under the bail-out scheme, income tax will increase but the 12.5pc corporation tax, which the Government dubbed a red-line deal-breaker if forced into negotiations, will not be touched.

Mr Lenihan said there have been very clear assurances from European states that tax rates are a domestic issue.

The banks, whose lending has brought the State to the brink of bankruptcy, are also to be targeted in a potential asset sell-off.

After seeing €23bn of deposits leave Ireland this year, banks are to be reduced in size.

Mr Lenihan said: "Banks will be downsized to meet the real needs of real Irish economy.

"That they will be put in a position where the bulk of their lending relates to Irish consumers and Irish businesses.

"That has to be the primary focus of our banks."

Ireland's State running costs are €19bn in the red.

But the deepening crisis has been in the banks with about €23bn of deposits shifted out of Ireland this year and prohibitive borrowing rates on the international markets.

The bailout plan has the backing of the IMF, the EU, G7 countries and Britain and Sweden, who are lining up bilateral aid.

British Chancellor George Osborne signalled today that Britain was looking at a loan in the region of €8bn.

Mr Osborne will make a statement to MPs on the rescue deal this afternoon.

In the meantime, the Government will push ahead with the publication of its Budget roadmap to recovery this week with headline figures on €15bn savings to be unveiled.

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