Four-year budget plan to be published early next week

 

The Government will publish the four-year fiscal recovery plan in the early part of next week, Minister for Justice Dermot Ahern said today.

Mr Ahern said today that the Government’s desire was to get the four-year plan into the public domain as soon as possible.

“We are fully working on that… We will keep to the timetable but we would like to get the plan out sooner rather than later,” he said.

His comments come amid continuing speculation that the State will have no choice but to avail of a bailout from the European Union, and possibly the International Monetary Fund, bailout.

Taoiseach Brian Cowen again denied the Government was making an application for funding for the state

Mr Cowen insisted the State was not in position where it could not meet its debt repayments. Ask if he expected the country to seek financial support from the EU, Mr Cowen said: “We are engaging constructively with partners."

Earlier French economy minister Christine Lagarde said Ireland had not requested European financial aid. "No, there is no request for aid," Ms Lagarde told France Info radio in an interview.

But European Central Bank vice president Vitor Constancio said Ireland could use the European Financial Stability Facility to help prop up its banking system to restore investor confidence.

"The problems of the Irish banking sector are not only problems of liquidity but also in some cases problems of capital, so losses," Mr Constancio said at an event in Vienna today.

"The Irish state is financed until part of next year, but it is also a problem of the banks that are at the centre of the problems in Ireland and considerations have to be pondered," Mr Constancio said.

He added that while "there has been dialogue with European institutions ... but so far no formal request".

Tomorrow’s Cabinet meeting will be attended by the Minister for Finance Brian Lenihan before he attends a critical meeting of European finance ministers in Brussels later tomorrow.

Mr Ahern cautioned that continuing speculation in the media and public domain could be harmful.

“We have to be very careful in relation to this. People need to be calm. Ultimately, there are people who may have their own particular interests in making comments. It’s vital that the less said about these issues, the less speculation there is. Speculation does lead, as we have seen, to some fairly significant spikes in the cost of funding of not just Ireland but a number of other countries across Europe.”

He said that it would be better to await the outcome of the meeting of finance ministers.

He also reiterated that Ireland had has not applied to IMF for any assistance. He did confirm, however, that there was “constant contact” with the Commission involving officials but placed them in the context of wider discussion to sustain the euro.

“When you consider that 24 out of the 27 [EU] countries are in deficit, Those discussions, particularly, in the context of the eurozone, are going on,” he said.

He accepted, nonetheless, that there clear difficulties involving Irish banks.

“The ECB has been extremely supportive of the Irish banking system and the difficulties it has been in .

“The overall situation is that Ireland is fully funded until mid 2011 and we are very happy that we are in that situation.

“At present, obviously, there is a difficulty. But as you can see today, the interest rate [on sovereign bonds] is coming down quite significantly. Hopefully over the week, the meetings of the finance ministers will be significant,” he said.

Asked was he confident that no bailout would be necessitated or demanded, he replied: “It’s not a question of being confident. We are taking this situation on a day-to-day basis. That will continue. “Things are happening pretty quickly so we can only take it day by day. And Ireland is confident in relation to our funding for ourselves as a country.

“Yes of course there are issues in relation to our banks. And as I said, that is obviously the support we have got from the ECB is significant and we welcome that.

European Central Bank council member Miguel Angel Fernandez Ordonez today called on Ireland to make a "final decision" on its fiscal crisis to calm markets.

The value of Irish bonds increased slightly this morning despite continued international concern about the State's finances. The Financial Times , Wall Street Journal and BBC have all reported that an Irish bailout may not be far away.

The yield on Irish 10-year bonds closed today at 7.946 per cent, down from an opening of 8.141 per cent. The spread to the German bund stands at 537 points, down almost 25 basis points on the day.

Fine Gael finance spokesman Michael Noonan said he believed European intervention was under way. "I think the Irish Government are fighting a rearguard action for appearances purposes," he said.

Mr Noonan said he believed the fiscal situation was manageable "if the government do what they are committed to doing and bring in a rigorous budget on December 7th and bring forward the kind of four-year budgetary plan which the European Commission are now demanding".

Elsewhere, Portuguese finance minister Fernando Teixeira dos Santos said today there's a risk that his country may have to ask for an international rescue due to continued uncertainty about peripheral eurozone economies, The Financial Times reported.

Earlier this month, Mr Cowen said the four-year plan would be published either this week or next week. That means that the plan looks likely to be published in advance of the critical Donegal South West byelection on Thursday, November 25th.

Mr Ahern also disclosed that the Cabinet will meet “very early” tomorrow morning to continue its Budget preparations and try to finalise the details four-year plan, which will contain six chapters, run to well over 100 pages, and which will be very specific about the measures that must be taken.