Republic of Ireland finally asks for €80bn EU bailout
The Irish government will have to abide by strict European Central Bank conditions and banks will be dramatically shrunk as it last night relinquished ultimate control of economic policies.
It has also been forced to remove itself from the international bond markets for three years because of prohibitive borrowing costs as the country was officially bailed out by the EU for up to €80bn.
The final size of the rescue package by the EU and the International Monetary Fund (IMF) has yet to be negotiated, but is likely to be smaller than Greece's €110bn bailout last May. A senior EU source said: "I would say we are talking about €80-90bn."
He added that the amount would include money to recapitalise the banks.
The banks are also facing full-scale nationalisation as further billions are pumped into the crisis-hit lenders.
The IMF said it wanted "swift'' talks about the aid and the economy.
The ECB is already going through the loan books of all the banks, including their mortgages books, to see what losses could yet emerge.
We need to raise €23.5bn next year alone, which the IMF/EU will now provide.
They will also have to cover the €20.7bn needed for 2012 and €18.9bn needed the year after.
After weeks of denials, confusion and controversy, Taoiseach Brian Cowen finally admitted the Irish government had made a formal request for a multi-billion euro rescue package.
It is the first time in the state's 88-year history that such a bailout has been sought.
But despite growing anger among the public -- and from within his own party -- Mr Cowen refused to shoulder any personal responsibility for the crisis, saying "circumstances" were to blame.
"I don't accept that at all. I would defend my decisions throughout my political career, any decisions I took, the context in which I took them and the rationale for taking them.
"I don't accept your contention, the premise to your question that I am the bogeyman that you're looking for.
"All these decisions were taken in the national interest," he said.
Mr Cowen also denied the Government was handing over power to the EU and IMF to make budgetary and economic decisions.
"The IMF or people like that don't micro-manage the Irish economy. We're not ceding any policy decision in relation to how we're going to continue with the direction in our own public finances."
Under the terms of the bailout, Ireland will be given €19bn in loans every year for the next three years from the IMF- ECB-EU special fund.
This combined €57bn bailout is solely to fund day-to-day spending -- and does not include the tens of billions needed to recapitalise the banks.
However, Mr Cowen and Mr Lenihan said they could not give an exact figure until new "detailed stress tests" were carried out on Ireland's crisis hit lenders.
The State is now expected to come under intense supervision, with the IMF/ECB likely to demand reports every three months on how our public finances are being managed.
And in another sign of the potential impact of the bailout, the minister said that while the Croke Park deal to protect public servants from job and pay cuts had not been raised, it "might be discussed in the future".
Fine Gael finance spokesman Michael Noonan warned the IMF would demand "fundamental restructuring" of how the State ran its public services.
"A lot of people are quite happy the IMF are coming in because they had lost all confidence in this Government," he said.
Fianna Fail TDs have been put under further pressure as their party hit a record low of 17pc in a new Red C opinion poll and face losing up to 40 Dail seats in an unprecedented voter backlash.
But despite the rumblings, there is no sign of any of Mr Cowen's potential successors being willing to challenge him yet. Fianna Fail TDs are adamant they will not act before the Budget vote on December 7.
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."
WHAT THEY SAID ON IRISH BAILOUT
Some of the quotes from a day of political drama in Dublin.
"I will be proposing to my colleagues that we should formally apply for a programme."
- After a week where his government was accused of refusing to confirm a bailout was on the cards, Irish Finance Minister Brian Lenihan revealed yesterday morning that he was about to ask cabinet colleagues to apply for a rescue fund.
"The Government today agreed to request financial support from the European Union and the Euro Area Members States. The IMF will also be requested to assist in the provision of support."
- An Irish government statement officially later confirmed it had asked for an international bailout for its crippled economy.
"I confirm that the government has today decided that Ireland apply for financial assistance to the European Union. The request of the government was transmitted to the European authorities this evening. The European authorities have agreed to our request."
- Ashen-faced Irish premier, Taoiseach Brian Cowen, confirmed his government will now negotiate the details of the deal.
"We have passed control on the big fiscal issues out of Irish hands."
- Irish Labour party representative Pat Rabbitte on the historic significance of the decision.
"This evening's announcements allow the course of economic and financial policy to be set on a more secure path. We can be reassured that the Irish banking system retains the support, not only of the Central Bank of Ireland, but of the European Institutions."
- Governor of the Central Bank of Ireland Patrick Honohan predicts greater stability.
"There are hard times up ahead. People have been very anxious over the last months...what I am trying to say at the minute, you know, don't be resigned into a kind of slough of despair."
- Finance spokesman for the main opposition party Fine Gael Michael Noonan.
"The Government should resign so that citizens can have their say in a General Election."
- Sinn Fein President Gerry Adams.
"Elections now. Democracy now."
- As Irish government ministers arrived for a crunch cabinet meeting to agree the bailout, a protester shouts his demands before being removed by police.