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Two-thirds of the Budget pain set to come from cuts

TWO-THIRDS of Ireland's Budget target in December will come from spending cuts, Finance Minister Michael Noonan revealed as he rejected a Greek-style write-off of Irish debt.

While Greece will get a 50pc write down on its national debt, Mr Noonan said arrangements for Greece did not represent "a good deal" for that country, with Greece stuck in a bailout programme until 2027 in a worse case scenario.

"Could you imagine any of us in politics going to the Irish people and saying, stick with it lads, we've another 16 years of this?" he asked.

Ireland should be back in private debt markets by the second half of 2013, Mr Noonan said, adding that he did not countenance a scheme such as the Greek one for the Republic.

The Finance Minister also revealed, for the first time, that two thirds of this year's Budget target will come from spending cuts, with the remainder coming from higher taxes.

A Government spokesman pointed to the severe pain the Greeks were taking under their extended bailout, as the tax-free threshold for income tax in Greece is lowered from €12,000 to €5,000, VAT applicable to restaurants and bars rises to 23pc and 30,000 civil servants are suspended on partial pay.

Mr Noonan insisted Ireland would ultimately benefit from this week's "quantum leap" in resolving the Eurozone's woes, since a global recession had been averted and countries would be better able to buy Ireland's exports.

"That's the big win for Ireland," he said.

Opposition politicians slammed the Government for signing an agreement that will see the Greeks write off about half their sovereign debts - while Ireland honours its debt in full.

"From an Irish perspective, it's noteworthy that the Government did not seek any reduction whatsover in the Irish debt burden and has committed itself to paying its debts in full," Fianna Fail finance spokesman Michael McGrath said.

It was "deeply disappointing" that the Government did not achieve any recognition in the agreement of the extraordinary cost incurred by Irish taxpayers in rescuing Irish banks, he said. "In addition, it now seems certain that the Government will proceed with the repayment in full of €3.5bn of unsecured, unguaranteed bond holders at Anglo Irish Bank and Irish Nationwide Building Society, starting with a €700m payment next Wednesday," Mr McGrath said.

The Government had "failed utterly" to achieve any progress on this, despite its clear promises on the issue, he added.

Sinn Fein president Gerry Adams TD said the Government had "missed a clear opportunity to put Irish banking debt on the agenda and to negotiate a reduction in the billions of euro that Irish taxpayers are having to pay to toxic bad banks and unguaranteed bondholders".