EU, IMF Agree on 'EUR 80-90 B' Irish Bail-Out

A file photo shows pedestrians walking past the Bank of Ireland in Dublin, Ireland. The crisis has been brought on by the recession and the almost total collapse of Ireland's banks, analysts say. Photo by EPA/BGNES

European and IMF officials have agreed on Sunday to help bail out Ireland with loans to tackle its banking and budget crisis, stabilize financial markets and prevent loss of confidence in other euro zone members, notably Portugal and Spain.

Irish Finance Minister Brian Lenihan said the amount would be less than EUR 100 B. According to reports the bailout package is expected to total EUR 80 to 90 B. The UK and Sweden have also offered direct loans.

Irish PM Brian Cowen said that the government would be publishing a four-year budget plan that would restructure the banking industry and banks will be made smaller.

The global financial crisis has dealt the Irish Republic a hard blow. The government has responded with deep spending cuts and costly bail-outs of the banking sector. Announcing the bail-out on Sunday, Prime Minister Cowen appealed for public solidarity.

"To the Irish people I say simply this: We should not underestimate the scale of our economic problems, but we must have faith in our ability as a people to recover and prosper once more," he said.

"The task of rebuilding our economy falls to our own efforts as a people," he told a news conference following a cabinet meeting on the rescue plan.

"That is where the focus of our efforts must turn over coming weeks, beginning with the four-year plan and then the budget. And now we need to show the solidarity in our own country that our neighbors have shown to us at this time."

Last week the cash-strapped country claimed it has shied away from asking for help, but a bail-out has been widely expected.

The Bulgarian deputy prime minister Simeon Djankov, who is also the country's finance minister, was the first to let the cat out of the bag on the date of an Irish bailout, telling Bulgarian reporters on Wednesday (17 November) that despite Irish insistence to the contrary, he expects a package will be cobbled together some time next week.

Once known as the Celtic Tiger for its strong economic growth - helped by low corporate tax rates - a property bubble burst, leaving the country's banks with huge liabilities and pushing up the cost of borrowing for them and the government.

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