DUBLIN: Crisis-hit Ireland, buckling under huge debts, will this week launch its 2011 budget to slash spending and lift taxation, as part of ongoing efforts to secure a huge EU/IMF international rescue package.
Irish Finance Minister Brian Lenihan is due on Tuesday to address the Dail, or lower house of parliament, and is expected to unveil savings of about six billion euros (eight billion dollars).
Tuesday’s statement will be the first in a series of budgets to implement a combined fiscal correction of 15 billion euros over the next four years.Lenihan is seeking to slash Ireland’s public deficit from about 32 percent of GDP this year – a record high for the eurozone – to below the target deficit of 3.0 percent by 2015.
The former Celtic Tiger nation wants to win a huge rescue package of up to 85 billion euros (113 billion dollars) from the European Union and the International Monetary Fund to help fix its devastating debt crisis.
After Tuesday’s budget, lawmakers will hold a vote over the measures – but the outcome of this is shrouded in uncertainty, analysts said.
“The recent Irish rescue package was dependent upon the passing of the budget through parliament,” said Investec economist Philip Shaw.He added: “Current thinking is that it will pass, either via the necessary independents backing the bill, or by the main opposition party, Fine Gael, abstaining. However, there remains an air of uncertainty.”
Ireland’s governing Fianna Fail/Green party coalition, led by Prime Minister Brian Cowen, is nursing a slender parliamentary majority of just two after losing a recent by-election.
As a condition for the huge bailout, the EU/IMF has said that Dublin needed to “rigorously implement the budget for 2011 and the fiscal consolidation measures announced afterwards”.
Dublin, savaged by bank bailouts, a property market meltdown and recession-ravaged tax revenues, unveiled a four-year strategy last month to slash a huge deficit and save 15 billion euros by 2014.
That represents a huge amount for a country with a population of almost 4.5 million people.
Unpopular Cowen, a member of the Fianna Fail party, has promised to hold a general election in the new year – as soon as parliament passes his tough budgetary measures.
His personal and party support has slumped to record lows following the EU-IMF bailout deal, a recent poll showed.
The Red C survey for The Irish Sun newspaper, the first conducted since the bailout was unveiled one week ago, shows that Cowen’s personal rating is just eight percent.
His centrist Fianna Fail party has also plummeted to 13 percent compared to the 42 percent backing it received in the 2007 general election.Last month, the government presented a series of tax rises and cuts to public sector pay, pensions and social welfare in a bid to slash a huge deficit by 2014.