Ireland will seek bailout loan
The Irish Government has confirmed it will seek a bailout loan from the International Monetary Fund (IMF) and Europe.
After an emergency Cabinet meeting lasting several hours in Dublin and talks with EU states, ministers signed off on plans for the rescue package.
Finance Minster Brian Lenihan earlier conceded the bank crisis is too big for the country too handle.
Taoiseach Brian Cowen said the bailout application would address the budgetary challenges of the Irish economy. Mr Cowen also confirmed that the controversially low 12.5% corporation tax will not be touched.
The amount of funding being applied for will be decided during the negotiations. The loan will be arranged through the IMF and the European Financial Stability Facility. Mr Lenihan said the UK and Sweden have also offered to help fund the package.
Europe's finance ministers said in a statement that "decisive" action on Ireland's economic problems should now restore "robust and sustainable growth". The joint statement from the eurozone and non-euro member states welcomed Ireland's formal request for aid and said the member states agreed with the European Commission and the European central Bank that "providing assistance to Ireland is warranted to safeguard financial stability in the EU and the euro area".
It went on: "In the context of a joint EU-IMF programme, the financial assistance package to the Irish state should be financed from the European financial stabilisation mechanism (EFSM) and the European financial stability facility (EFSF), possibly supplemented by bilateral loans to be negotiated by EU member states. The UK and Sweden have already indicated today that they stand ready to consider a bilateral loan."
The EFSM is a 60 billion euro bail-out scheme (£51.5 billion) involving all EU countries and to which the UK contributes about 12%. The EFSF is a 440 billion euro (£378 billion) pot of money set up earlier this year in the wake of the Greek economic crisis as a central fund to help any eurozone member state in difficulty, and to which only eurozone countries contribute.
Any IMF contribution would include a 4.5% UK contribution.
A UK Government spokesman commented: "As the Chancellor said last week, it is in Britain's national interest that the Irish economy is successful and its banking system is stable, so Britain stands ready to support Ireland in the steps that it needs to take to bring about that stability. The UK will be closely involved in discussions on the scale and type of assistance as they develop."