Ireland to make "formal application" for EU/IMF bailout (UPDATE)
Ireland's finance minister confirmed Sunday that the country would be applying for a financial rescue package from the European Union, the International Monetary Fund (IMF) and the European Central Bank (ECB), dpa reported.
Lenihan said he would propose the application to Sunday afternoon's meeting of the cabinet, which was called to consider a cost-cutting four-year government budget.
Ireland has been under pressure for over a week to accept an EU/IMF bailout to help solve its debt crisis, which is threatening the stability of the euro.
Conceding that Ireland's debt problems had become "too big" for the country to deal with, Finance Minister Brian Lenihan said he would now be formally applying for a rescue programme and formal negotiations would begin.
A 45-billion-euro government (61.6-billion-dollar) bailout of Ireland's shaky banking sector sent the public deficit this year to a staggering 32 per cent of gross domestic product.
Analysts say that a major restructuring of the Irish banking sector is likely, with the possible merger of banks or the creation of a good and bad bank.
The minister confirmed that the amount of money to be requested in the bailout amounted to "tens of billions" of euros, but he denied that it would be as much as 100 billion.
Ireland's contentious low corporate tax rate was "not on the agenda," he said.
The minister said the ECB was behind the Irish banking system and capital was needed to ensure the Irish banks had "firepower."
But, he said banks had to be "weaned" away from central bank funding.
The amount of interest being charged was subject to negotiation but it would be 'a lot less' that we would have paid on the international markets.
Lenihan also said the minimum wage would have to be looked at.
The cabinet meets later Sunday to finalize its four-year recovery plan for the economy.
The cabinet is expected to approve a 160-page austerity plan for how Ireland will cut spending by 15 billion between now and the end of 2014.
IMF and European Commission officials arrived in Dublin to conduct an audit of Ireland's accounts Thursday, amid government denials that Ireland needed a bailout.