EU ministers approve Irish bailout

Ireland’s prime minister has been fighting off calls from protesters to resign over his handling of the economy [EPA]

European Union finance ministers in Brussels have endorsed a multi-billion dollar bailout for Ireland arranged by the bloc and the International Monetary Fund (IMF).

Jean-Claude Juncker, the chairman of the Eurogroup of eurozone finance ministers, said of the $113bn deal that $13.2bn was for “immediate recapitalisation” and $33bn for contingency support to Ireland’s banking sector.

Earlier, RTE, the Irish state broadcaster reported that interest rates on the nine-year loans could be as high as 6.7 per cent – significantly more than the 5.2 per cent charged to Greece when it was bailed out earlier this year.

However, at a news conference in Dublin, Brian Cowen, the Irish prime minister, said: “If drawn down in total today, the combined annual average interest rate would be of the order of 5.8 per cent per annum.

“The rate will vary according to the timing of the drawdown and market conditions.”

The eurozone countries also agreed that the private sector will share the burden in future bailouts after an existing emergency fund expires in 2013, a diplomat told the AFP news agency.

Germany and France had urged a rapid conclusion to negotiations on the Irish bailout, which will be accompanied by drastic Irish austerity measures, before markets opened on Monday.

The four-year austerity plan, revealed on Wednesday, was key to securing the international bailout and comprised $13.2bn of spending cuts and $6.6bn in tax hikes.

The plan also involves cuts to 25,000 jobs, public sector pay, pensions and social welfare in a bid to slash a huge deficit and save $19.8bn by 2014.

Cowen has been fighting off calls from opposition politicians to quit over his handling of the economy, insisting he must see through the austerity package and the budget to secure the bailout.