Ending weeks of opposition to a European Union bailout,heavily-indebted Ireland has agreed finally with the EU and the International Monetary Fund (IMF) on a multi-billion euro rescue package to avert bankruptcy. Ireland will be the first country to receive financial support from the euro 750 billion (nearly a trillion dollars) financial safety net,spread by the EU and the IMF six months ago,to help euro zone nations facing liquidity crisis. It was set up after debt-ridden Greece slipped to the verge of a bankruptcy in May and had to be rescued by a euro 110 billion lifeline from the EU and the IMF. The level of assistance for Ireland from the Financial Stability Facility will be decided during the negotiations with the EU and the IMF in the coming days,but European Commission sources in Brussels indicated that it could be between euro 80 billion and 100 billion. The agreement on the second bailout of a euro zone nation within six months came after the Irish cabinet at an emergency meeting in Dublin decided Sunday night to make a formal request for a financial assistance from the EU,which it rejected until a few days ago. "I confirm today that the government decided that Ireland apply for an assistance from the European Union," Prime Minister Brian Cowen told a news conference after the cabinet meeting. He said the governments request was transmitted to the European authorities in the evening and "they have agreed to our request". Cowen said a formal negotiation on the level of EU aid and other aspects of the bailout will begin now on the basis of a programme worked by the government of Ireland,the EU,the IMF and the European Central Bank during four days discussions in Dublin. He said he expected an agreement to be finalised within the next few weeks. The government will have to fulfil certain conditions,including drastic spending cuts,in return for the bailout and they may be unveiled when the negotiations are expected to be completed by the end of this month. Irelands low corporate tax of 12.5 per cent,which has been a bone of contention with its EU partners,will not be increased,Cowen said. The finance ministers of the 16 euro zone nations,who held a telephone conference while the Irish cabinet was meeting,also confirmed that the "Celtic Tiger" will be bailed out with the support of the EU and the IMF. Ireland got into financial trouble after it spent more than euro 45 billion to rescue the countrys banks,which faced bankruptcy following the collapse of the once booming property business. This pushed up the country¿s budgetary deficit to a staggering 32 per cent of the GDP this year,the highest among the euro zone nations and 10 times the limit set by the EUs growth and stability pact. The Irish governments borrowing costs rose sharply in the past weeks as investors became concerned about its ability to service its debts. But the countrys financial woes are much deeper than believed until now. Irelands Finance Minister Brian Lenihan admitted on Sunday that the country needs the EUs financial assistance not only to shore up the battered banks,but also to cover a 19 billion euro shortfall in this years budget. Until last week,he insisted that the government is "fully funded till mid-2011". Ireland came under mounting pressure from several EU partners and the European Commission to seek a bailout from the EU. They feared that its debt crisis could spill over to other financially-troubled nations such as Portugal and Spain and could threaten the stability of the euro zone as happened during the Greek debt crisis. The finance ministers of the euro zone nations expressed relief that Ireland finally decided to ask for a EU financial rescue. "The ministers agree with the European Commission and the European Central Bank that their support for Ireland is necessary to protect the financial stability in the EU and in the euro area," they said in a joint statement. German Finance Minister Wolfgang Schaeuble welcomed the Irish governments decision to seek financial rescue by EU. As the Irish debt crisis deepened in the past weeks,the risk of a contagion in the euro area was great and therefore the EU urged the government in Dublin to apply for a bailout,he said in a television interview. The euro zone rescue fund was created to help member-nations which are in financial difficulties and thereby preserve the stability of the euro zone. "This is not about defending a single country,but about defending the common currency," he said. Ireland will have to fulfil certain stringent conditions to receive the assistance and they will be negotiated in the coming weeks,Schaeuble said. These conditions are necessary to tackle some of the problems,which caused the present crisis,he said. Cowen said Irelands banks will become smaller as part of a restructuring of the banking industry. Another main focus of the rescue package will be to reduce budgetary deficit to 3 per cent of the GDP by 2014. The Irish cabinet on Sunday agreed on a programme to save up to 15 billion euros over the next four years through spending cuts.
