Irish finance chief backs bailout

Concerns are growing that the huge deficit racked up by Ireland could effect other weak economies like Portugal [EPA]

Brian Lenihan, the Irish finance minister, has said he will recommend to the cabinet that the government should apply for a financial bailout programme from the European Union and the IMF.

The cabinet is meeting on Sunday in Dublin, the capital, to finalise a four-year deficit crisis plan seen as key to winning the international bailout and easing fears about the future of the euro.

“There will be a meeting of the government this afternoon. I will be proposing to my colleagues that we should formally apply for a programme,” Lenihan told RTE state radio.

He did not specify the size of the bailout, but agreed it would run to tens of billions of euros. “Certainly, it will not be a three-figure sum,” he said.

Media reports suggested the bailout package was thought to be worth between $55bn and $137bn.

Irish officials are into their fourth day of talks in Dublin with the EU, the European Central Bank and the IMF over the assistance.

“Obviously, the government will have to look at the various considerations involved but as the responsible minister I believe it is important that this state continues to fund itself in a stable way,” Lenihan said.

“That economic continuity is preserved. That there is no danger to the borrowing which the state requires to make in its own interest and also, and above all – and the issue that has been highlighted this week – that our banking sector is stabilised.

“So, for all these reasons I will be recommending to the government that we should apply to a programme and open formal negotiations.”

‘Celtic Tiger’

Lenihan said market conditions had been very difficult since late August.

He added that since a visit to Dublin a fortnight ago by Ollie Rehn, the EU economic commissioner, “market conditions had impacted on the banking sector in particular”.

“There was considerable concern both on our part and on the part of the Europeans about this issue,” the minister said.

Lenihan said the government had decided last Tuesday, before a meeting of eurozone ministers’ in Brussels, “to open this process of intensive discussion about the issues”.

“It was important from a political point of view, from a  national point of view that we safeguard the issues of the state and the taxpayer at all stages in this process,” he said.

Concerns are growing that the huge deficit racked up by the one-time “Celtic Tiger” as it tried to save its banks could have a knock-on effect on other weak economies like Portugal, echoing the Greek crisis earlier this year.