€85bn bailout talks confirmed

Taoiseach Brian Cowen confirmed today the State is negotiating an €85bn bailout loan from the International Monetary Fund and Europe (IMF/EU).

Mr Cowen said the figure has been discussed with the IMF/EU financial rescue mission during two days of talks in Dublin.

“The size of any programme has not been decided but an amount in the order of €85bn has been discussed,” the Taoiseach said.

The Government will unveil its four-year plan to secure €15bn of savings at 2pm today.

In the Dáil Mr Cowen described the bailout as an overdraft and said the talks were proceeding as quickly as possible.

“We’re talking about here, an overdraft, if you like,” Mr Cowen said.

“It’s a contingency, it’s available to us as required. And on the basis of State’s requirements beyond July, for which we are pre-funded, it’s available for draw-down for that purpose as well.”

Mr Cowen later said he was using the term overdraft for “illustrative purposes”, with the negotiations centred on how the money can be drawn down, if required.

“That is a technical and complicated piece of work that is not yet completed,” he said.

The Government will today publish a €15bn plan for drastic savings today to tackle the economic crisis.

Significant tax hikes, new levies on property and water, and cuts to the dole and minimum wage are expected in the 150-page four-year budget roadmap.

Mr Cowen has called for solidarity across the political system, while social justice campaigners demanded the poorest should be spared.

Opposition parties were warned that Ireland’s bailout is only secure if swingeing cuts and tax rises and a more detailed €6bn Budget on December 7 are passed.

Labour leader Eamon Gilmore criticised the Government's position but a fiery Mr Cowen hit back, branding the party's opposition to "bad bank'' Nama and its banking policy a ``bum steer''.

“And hey presto, because Eamon’s in charge, the banks will be repaired and all will be well. That’s not a policy,” Mr Cowen said.

“That’s precisely what I would define as a bum steer. And that is the truth of the matter.”

There are concerns in some circles of a sustained run on the banks by customers fearful over the future survival of the institutions.

Irish banks have seen 23 billion euro (£19 billion) in deposits leave the country this year.

Guaranteeing Ireland’s solvency is also seen by EU governments, and officials in Dublin, London, Brussels and Frankfurt, as essential to protecting the euro as a currency.

“Contagion” has been the fear across Europe with worries that the Irish financial and economic chaos will spill over to troubled nations like Portugal, Spain and Italy. Mr Cowen last night denied he was clinging to power as the Opposition demanded he bring forward next month’s Budget.

The Taoiseach also dismissed calls to revise a timetable to strike a deal on the bailout.

Mr Cowen spent several hours with his Fianna Fáil parliamentary party last night where a number of TDs questioned his leadership.

The Taoiseach told colleagues he felt he had a job to do and was focused on what needed to be done.

The Government’s chief whip John Curran denied rumours of a heave and claimed the overwhelming number of people who spoke on the leadership issue were “absolutely supportive of the Taoiseach”. Mr Curran said he believed the Government had the numbers to get the December 7 Budget through the Dáil.

The Government has support for the drastic cuts from partners the Greens, who want a general election in late January. But two Independent TDs - crucial to the razor-thin majority – insist their support cannot be relied upon.

The legalities of passing a budget in Ireland mean that the new year poll, which Mr Cowen has agreed to, could be pushed back as far as late February or March.

Pressure was also mounting after the IMF issued a position paper stating that the minimum wage and dole payments should be cut.

The document, signed off on Monday by lead negotiator in Dublin Ajai Chopra, said Ireland had to tackle its rising unemployment rate and should gradually reduce benefits over the time a person is out of work and impose stricter job search requirements.

Meanwhile European Commission President Jose Manuel Barroso today said the European financial intervention in Ireland should help put the country back on a path to recovery.

Mr Barroso referred to the two emergency funds set up last May following the Greek economic crisis.

He told the European Parliament in Strasbourg this morning that these funds should help stabilise Ireland, the 16-nation eurozone and the bloc as a whole.

"If a week is a long time in politics, a month can seem like an eternity," Mr Barroso said.

"A lot has happened since last week… not least recent events in Ireland.

"The action intended is a further crucial step to safeguard the financial stability of Ireland, the euro area and the European Union as a whole."