Irish cabinet meets to finalize budgetary plan
The Irish cabinet on Sunday met to finalize the four-year budgetary plan for 15 billion euros (20.51 billion U.S. dollars) of deficit cutbacks.
The plan is designed to bring Ireland’s budget deficit back to within 3 percent of the GDP by 2014.
The Irish media reported that dramatic cuts in social welfare spending, the minimum wage and public sector numbers form key elements of the plan.
The plan will also outline that the 15-billion-euro adjustments will be divided into 10 billion euros of cuts to spending and 5 billion euros in taxation.
In the past few weeks, Irish ministers had many extra meetings considering the elements needed to make up the plan, which will chart a course to reduce the country’s public finances deficit to the required standard.
The plan is due to be published in the next few days, according to local newspapers. Irish Health Minister Mary Harney said on Friday it will be published in the early part of next week.
The ministers are considering the plan in the context of the budget to be delivered on Dec. 7. The Irish government has said a 6-billion-euro (8.20 billion dollars) cutback which was part of the budgetary plan for 15-billion-euro deficit cutbacks will need to be made in the next budget.
The tripartite talks are still getting underway in Irish capital Dublin. The talks are aimed at bringing stability to the Irish banking sector. The Irish government is expected to battle to prevent any increase in the 6-billion-euro (8.20 billion dollars) adjustment proposed for the 2011 budget and the 15-billion-euro (20.51 billion dollars) target in the four-year plan.
Negotiators from the EU, the IMF and the ECB are still examining possible tax-raising schemes that could be imposed on Ireland for accepting the rescue cash.
But the Irish government has announced it will not increase the low corporate tax rate as part of the 2011 budget, which has the third-lowest corporate tax rate for 12.5 percent in the EU, following the 10-percent figure of Bulgaria and Cyprus.
The low rate has led many companies, including U.S. and British firms, to establish a corporate presence in Ireland and had played a strong role in buoying the economy before the current difficulties.
In an interview with Irish state broadcaster RTE on Thursday, Irish Central Bank Governor Patrick Honohan said he expected the Irish government will have to accept a multi-billion euro loan.
The loan would be borrowed at a rate of 5 percent in the region, he added.
As yields on Irish 10-year bonds have reached 9 percent, the highest level since the euro came into being in 1990, there are deep worries that Ireland may follow the suit of Greece and another round of sovereign debt crisis may be looming, dragging in other eurozone countries such as Spain and Portugal.
As bank crisis deepens, Irish trade union warned of civil unrest. The Technical Engineering and Electrical Union said further “draconian” public sector cuts of 15 billion euros over four years could lead to street disorder. It urged a campaign of civil disobedience unless Irish Taoiseach Brian Cowen calls an immediate election.
The latest Sunday Business Post/Red C also showed that support for Cowen’s Fianna Fail has declined further to its lowest level and the party could face a defeat in the general election.
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