Ireland bailout set to be finalised

EU finance chiefs in Brussels to conclude details of $113bn deal amid worries over high interest rate charge to Irish.

    A draft agreement has been reached on a bailout package, despite protests on Saturday [EPA]

    The Irish government says it expects a multi-billion dollar bailout agreement to be finalised at a meeting of European Union finance ministers, including Brian Lenihan, Ireland's representative, in Brussels on Sunday.

    "The government met last night and were briefed on the progress which had been made," the prime minister's office said in a statement.

    "The government decided to proceed to conclude a programme on that basis and authorised the minister for finance to finalise the negotiations at a meeting of the EU finance ministers in Brussels this afternoon."

    A diplomat told the AFP press agency that a draft agreement had already been reached on Sunday between international negotiators and Ireland on the bailout, worth around $113bn.

    "The plan is ready to be discussed and adopted today," an official close to the negotiations told the AFP news agency.

    The deal looks set to go ahead in spite of a major protest in Dublin on Saturday against both the bailout and the Irish government's austerity programme.

    EU finance ministers began finalising details of the bailout at a meeting in Belgium's capital on Sunday, which began at 1200 GMT. The Irish cabinet is also reviewing the loans package.

    The EU and the International Monetary Fund (IMF), concerned that the debt crisis could spread to other eurozone member states, will be loaning the money to Ireland.

    It would be Europe's second bailout this year, after the $145bn aid granted to Greece in May.

    Rate concerns

    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.

    Eamon Ryan, Ireland's communication minister, dismissed the rate speculation.

    "I think that figure was inaccurate and I think it was unfortunate it went out there because I'm sure it scared a hell of a lot of people," he told RTE.

    "The overall figure has to make sense for us in that we are able to pay it back."

    Earlier, Brian Hayes, deputy finance spokesperson for the Fine Gael main opposition party, had also expressed concern at talk of such a high interest rate.

    "The scale of the rate that has been speculated about is simply unacceptable in terms of a future for this country. This country cannot possibly grow its way out of the current recession," he said.

    About 46 billion euros will be used to shore up Ireland's shattered banking system, which was left exposed by the financial crisis and the collapse of a domestic property bubble.

    Germany and France are urging a rapid conclusion to negotiations on the package, which will be accompanied by drastic Irish austerity measures, before markets open on Monday.

    The four-year austerity plan revealed on Wednesday, key to securing the international bailout, comprises $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.

    SOURCE: Agencies


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