Tough Irish budget set to pass
By Padraic Halpin and Carmel Crimmins |
December 9, 2010, Thursday
|
Print Edition
Print Edition
THE Irish government detailed the toughest budget on record yesterday, targeting 6 billion euros (US$7.92 billion) in spending cuts and tax hikes, and warning passage was crucial to avert a deeper crisis and free up European Union and International Monetary Fund rescue funds.
In a speech to parliament, Irish Finance Minister Brian Lenihan sketched out austerity measures for 2011, including cuts to child benefit and public sector pensions, but stuck with growth forecasts that some economists believe are too optimistic.
Ireland's parliament passed the first in a series of votes on the budget on Tuesday evening, suggesting that enough of the budget is likely to pass to release bailout funds. The budget's success had looked in doubt when independent politicians, on whom the government depends for support, said they might vote against it.
But the steps to pass the budget seemed to satisfy the IMF, which scheduled a board meeting for tomorrow to consider a 22.5 billion euro loan for Ireland, part of a bigger 85 billion euro joint EU/IMF rescue package.
IMF Managing Director Dominique Strauss-Kahn is set to return to Washington from Europe to chair the meeting. "We welcome approval of the 2011 budget by the Irish parliament," an IMF spokesman said. "This is a clear sign of Ireland's strong commitment to tackle its problems and harness the impressive growth potential of this open and dynamic economy."
A burst property bubble has transformed Ireland from one of Europe's brightest economic stars to a country that has been forced to seek a bailout from the IMF and the EU to cover its borrowing costs and shore up its banks.
The bailout, the second in the eurozone after Greece was rescued in May, has stirred outrage in the humbled former "Celtic Tiger." Opposition parties slammed the government for mismanaging the economy and sacrificing Irish sovereignty.
The 2011 budget is the toughest in a four-year austerity plan that aims to save 15 billion euros - nearly 10 percent of annual economic output - and get the worst deficit in the region back within EU limits by 2014.
In a speech to parliament, Irish Finance Minister Brian Lenihan sketched out austerity measures for 2011, including cuts to child benefit and public sector pensions, but stuck with growth forecasts that some economists believe are too optimistic.
Ireland's parliament passed the first in a series of votes on the budget on Tuesday evening, suggesting that enough of the budget is likely to pass to release bailout funds. The budget's success had looked in doubt when independent politicians, on whom the government depends for support, said they might vote against it.
But the steps to pass the budget seemed to satisfy the IMF, which scheduled a board meeting for tomorrow to consider a 22.5 billion euro loan for Ireland, part of a bigger 85 billion euro joint EU/IMF rescue package.
IMF Managing Director Dominique Strauss-Kahn is set to return to Washington from Europe to chair the meeting. "We welcome approval of the 2011 budget by the Irish parliament," an IMF spokesman said. "This is a clear sign of Ireland's strong commitment to tackle its problems and harness the impressive growth potential of this open and dynamic economy."
A burst property bubble has transformed Ireland from one of Europe's brightest economic stars to a country that has been forced to seek a bailout from the IMF and the EU to cover its borrowing costs and shore up its banks.
The bailout, the second in the eurozone after Greece was rescued in May, has stirred outrage in the humbled former "Celtic Tiger." Opposition parties slammed the government for mismanaging the economy and sacrificing Irish sovereignty.
The 2011 budget is the toughest in a four-year austerity plan that aims to save 15 billion euros - nearly 10 percent of annual economic output - and get the worst deficit in the region back within EU limits by 2014.
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