Lenihan proposes bailout application

Finance Minister Brian Lenihan is to ask the Government to apply for a bailout loan from the International Monetary Fund (IMF) and Europe.

Minister Lenihan confirmed he will ask Cabinet colleagues today to agree to the unprecedented financial rescue.

“I will be proposing to my colleagues that we should formally apply for a programme,” the minister told RTÉ Radio.

Minister Lenihan refused to disclose how much money the country would be looking for.

At present Ireland is spending €19bn more than it receives in taxes and revenues but the crisis-hit banks also need a massive injection of back-up funds.

An IMF-European bailout is expected to run to tens of billions.

Minster Lenihan said: "I believe that it is important that this State continues to fund itself in a stable way, that economic continuity is preserved, that there is no danger to the borrowing which the State requires to make in its own interest.

“And also and above all, and the issue that has been highlighted this week, that our banking sector is stabilised.

“For all those reasons I will be recommending to the Government that we should apply to a programme and open formal negotiations.”

Speaking on his way into that Cabinet meeting this afternoon, Environment Minister John Gormley said applying for help is the right thing to do.

"In all likelihood the Minister will bring that memo to Government this afternoon, and he is recommending that we go forward with that proposal," Minister Gormley said.

"Under the circumstances I think it makes sense."

Reacting to the announcement, Fine Gael's Finance Spokesperson Michael Noonan said in some ways we are lucky that Europe is on hand to help out.

"The Government had driven the country into the ground, and they had the choice of any person who gets into huge debt: they could have gone bankrupt," Deputy Noonan said.

"But if they had taken that option we would all have gone bankrupt with them.

"It was lucky that we had colleagues in Europe that were prepared to come in and rescue us."

Sinn Féin Dáil leader Caoimhghin Ó Caolain said however that the Cabinet has no authority to incur further massive debt by applying for an IMF/EU loan, and called on them to resign.

“The Fianna Fáil/Green Government has no political authority and no democratic mandate to act in the name of the Irish people and to incur further massive debt on this and future generations," Deputy Ó Caolain said.

“The Minister for Finance's announcement confirms what was being denied for the past ten days by this Government – that the Government is to put the State further in hock to international money-lenders.

"The cost is to be savage and widespread cutbacks that will plunge large sections of the Irish people into poverty."