THE Government will have to pay higher interest on the money it borrows to keep the country afloat following yesterday's dramatic €45bn rescue of Greece.
We are faced with a bigger interest bill because lenders now regard Ireland as a higher risk than most other countries in the eurozone.
And that means there will be fewer resources for essential services and taxpayers face the prospect of more severe budgets than originally anticipated.
The knock-on effects of the Greek bailout were emerging last night, with Ireland's borrowing costs rising and the euro plunging to a new low.
An intense international spotlight will now fall on indebted countries such as Ireland, Spain and Portugal -- the highest-risk economies in the eurozone.
Immediately after the Greek rescue, Ireland's borrowing costs for short-term money rose from 2.08pc to 2.38pc, while the cost of longer-term money rose throughout the day to 4.78pc, significantly hiking our repayment bill. We are now borrowing the third most expensive funds in the eurozone, after Greece and Portugal.
Yesterday, the International Monetary Fund (IMF) and the EU responded to an emergency request for aid from Greece.
That means Greece will now be able to get €30bn of loans from the EU and €15bn from the IMF at an interest rate of 5pc to help it deal with spiralling debts. However, even the rescue was starting to unravel last night as the cost of borrowing for the beleaguered nation went back up in late trading.
Traders said Ireland should not end up with the same problems as Greece as long as it kept tackling its giant deficit, which is 14.3pc of everything we produce.
"The Greek debt story is significantly worse than the rest. The best thing that Ireland can do is to focus on containing the fiscal deficit," Padhraic Garvey, a bond strategist with Dutch bank ING, told the Irish Independent.
He said the bond market, which controls the interest rates for countries, would take fright if there was any "slippage" on the Government's plan, which is to push the deficit down to 3pc by 2014.
In a dramatic day, the euro dropped to the lowest level in almost a year against the dollar. Pressure is coming on the G20 to do something about the pressures building within the eurozone.
Finance Minister Brian Lenihan is set to get opposition backing for his plan to contribute €450m to the EU's bailout of Greece.
Both Fine Gael and Labour last night said it was important to show "solidarity" with Greece, which has to overcome a €300bn debt mountain.
Both parties are also conscious that it is important to back the concept of EU states supporting a struggling member -- in case Ireland gets into similar difficulties.
It means the legislation needed to allow the bailout is likely to pass through the Dail quickly when it is introduced in the coming weeks.
So far, bond traders have kept faith with Ireland, despite the massive bailouts given to the banks, which amount to more than €30bn. Greek bonds, on the other hand, are being shunned by the markets.
The EU said the terms of the aid package may be agreed "in a matter of days".
However, German Chancellor Angela Merkel, who is reluctant to put her taxpayers' money at risk, said Greece would only get the money if it agreed to trim its deficit according to strict targets.
Germany and France will contribute more than half the bailout funds.