Ireland set to agree multi-billion euro bailout

Ireland is on the verge of an unprecedented bailout worth up to 70 billion euro.

• A protestor blocks the car of Minister for Tourism, Culture and Sport Mary Hanafin as she approaches Government Buildings in Dublin for today's cabinet meeting. Picture: PA

The funds will come jointly from the International Monetary Fund (IMF) and Europe after the Government conceded the bank crisis is too big for the country to cope with alone.

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Finance Minister Brian Lenihan insisted Ireland had not been forcedinto the plea for help and billed the mammoth rescue as stand-by firepower for the banks.

He refused to put a figure on the total bailout but accepted it was tens of billions and not a "three figure" sum.

And he attempted to quell fears that the IMF and Europe will hold the levers of power with the potential to hike the controversially low 12.5% corporation tax rate.

"That issue is off the agenda now. Let's be clear about that," Mr Lenihan said.

Ireland's State running costs are 19 billion euro in the red.

Mr Lenihan described the IMF-European money as contingency capital which, along with "structural reform" of the banks, will put them on the road to permanent recovery.

Financial experts have warned that the banks need about 70 billion euro in total to create the kind of confidence needed in international money markets.

"Whatever figure is arrived at it will not necessarily be drawn down," the minister said.

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"It's a figure to demonstrate the kind of support that's available to back up the Irish banking system as part of the Euro system."

"The point I'm making is that not all the money will go in at all. It's a stand-by fund."

The Cabinet held an emergency meeting at Government Buildings in central Dublin to sign-off on the application.

A lone protester was arrested as ministers arrived for the talks.

The middle-aged man was detained after blocking the entrance to Government Buildings and refusing to move to allow Tourism Minister Mary Hanafin to pass in a car.

Formal talks on the shape of the loans and how they will be held and paid out will take place over the coming days. Negotiations could last several weeks.

In the meantime, the Government will this week press ahead with a four year budget roadmap designed to cut 15 billion euro off State spending.

Department of Finance number-crunchers are also in the middle of planning the December 7 Budget which is targeting 6 billion euro savings.

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Mr Lenihan said the 8.65 euro minimum wage, the second highest in Europe, will have to be looked at. Social welfare cuts and new taxes are also on the cards.

The Government has faced damning criticism and calls for resignations over the last week after initially insisting there were no talks with the IMF before conceding late in the week that the country might need a loan.

Mr Lenihan added: "I'm sorry if people believe that they were misled in any way. I certainly did not mislead them in any respect. And I know that no member of the Government intended to mislead them."

On top of that a by-election in the once staunch heartland of the ruling Fianna Fail party takes place on Thursday.

The Government is already operating a razor thin majority and with victory in Donegal South-West unlikely the Fianna Fail-Green coalition could be left with a margin of just two seats to retain power.

Caoimhghin O Caolain, Sinn Fein, said the coalition has no authority to load more debt on the state and called on them to resign.

"The cost is to be savage and widespread cutbacks that will plunge large sections of the Irish people into poverty," Mr O Caolain said.

"If they are not savage enough for the IMF and the EU they will be deepened further. Social supports, public services and jobs will be devastated if this proceeds."