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Ireland unveils austerity plan
Debt-ridden country aims to save $20bn, enabling it to receive a bailout package from the EU and IMF.
Last Modified: 24 Nov 2010 15:50 GMT
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The austerity measures and subsequent bailout package as angered many Irish residents [EPA] The Irish government has presented a four-year austerity plan outlining $20bn in savings, a key step towards securing aid from the European Union and the International Monetary Fund."I am hopeful for the future that this plan is another confidence-boosting measure for national recovery, another signpost along the road to recovery," Brian Cowen, the prime minister, told parliament on Wednesday as he presented the plan.
Among the key points of the proposal, sales tax will be raised to 23 per cent by 2014, but the 12.5 per cent corporation tax rate - a key attraction for foreign companies that invest in Ireland - will be maintained.
Government officials have also said they would hike the value added tax (VAT) on goods and services to 23 per cent by 2014 from the current level of 21 per cent as part of measures aimed at slashing the public deficit.
The minimum wage is to be cut, social welfare spending slashed, the number of public employees reduced, while a new property tax and higher income taxes will be instituted. Those changes alone will yield $830m for the government as it seeks to save $20.1 billion by 2014.
Al Jazeera's Rory Challands, reporting from Dublin, said that Cowen has been trying to put a positive spin on the austerity measures.
"He has repeatedly said it is in the public interest, amid growing unpopularity over these measures," he said.
Credit line
Cowen previously said that the bailout requested from the EU and IMF could amount to $115bn, but some analysts say that figure is too small to save the country from eventual default.
He also said that the bailout package would represent an overdraft or credit line, not the total required immediately for the country, and was still subject to detailed negotiations with IMF and European Commission experts who descended last week on the capital Dublin.
Brian Cowen, the prime minister, said the plan is vital for Ireland's economic recovery [EPA] Ireland will be the second country in the 16-nation euro zone to be rescued this year, after Greece.But Marc Coleman of the National Forum Think Tank told Al Jazeera that the measures would not impact greatly on Ireland's economic problems.
"These measure will not assist in the continued struggles many Irish people are facing. An attempt to maintain foreign investment in Ireland will not help domestically," he said.
Francois Baroin, the French budget minister and government spokesman, said that Nicolas Sarkozy, the French president, would discuss the bailout with Angela Merkel, the German Chancellor, on Thursday.
Merkel has said Germany is prepared to help Ireland but the support of the euro zone's biggest player is conditional on "making clear what steps a country must take to get back on a path of stabilisation".
Local media however, has reported that the situation was so critical that Dublin could pump extra cash into the ailing banks as early as this weekend, well before the first European and IMF funds are set to arrive.
The European Commission said talks were progressing smoothly but would take several more days.
"Hopefully it can be concluded around the end of November - I cannot be more precise than
that," a spokesman told reporters in Brussels.
Once a loan agreement is signed, it has to be approved by European finance ministers and the IMF board before the first funds can flow, and disbursements are likely to be linked to benchmarks such as the adoption of the 2011 budget.
Source:
Al Jazeera and agencies
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