Lenihan: Budget 'will be our own budget'

Ireland will not be forced into a Budget dictated by the International Monetary Fund and Europe, Finance Minister Brian Lenihan insisted today.

As formal negotiations on a multi-billion bailout begin in Dublin, the minister moved to ease fears that foreign officials will hold the State’s economic purse strings.

“I’m quite satisfied on the basis of the discussions to date that the Budget that will be presented to Dáil Eireann on 7th December will be our own Budget, nobody else’s Budget,” Mr Lenihan told RTE Radio.

“There has been no request for any change in that.”

The IMF-EU rescue package is estimated to be up to €90bn.

Under the bail-out scheme, income tax will increase but the 12.5% corporation tax, which the government dubbed a red-line deal-breaker if forced into negotiations, will not be touched.

Mr Lenihan said there have been very clear assurances from European states that tax rates are a domestic issue.

The banks, whose lending has brought the State to the brink of bankruptcy, are also to be targeted in a potential asset sell-off.

After seeing €23bn of deposits leave Ireland this year, banks are to be reduced in size.

Mr Lenihan said: “Banks will be downsized to meet the real needs of real Irish economy.

“That they will be put in a position where the bulk of their lending relates to Irish consumers and Irish businesses.

“That has to be the primary focus of our banks.”

Ireland’s State running costs are €19bn in the red.

But the deepening crisis has been in the banks with about €23bn of deposits shifted out of Ireland this year and prohibitive borrowing rates on the international markets.