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Ireland in talks over multi-billion loan

Pa
Thursday 18 November 2010 10:31 EST
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Irish Taoiseach Brian Cowen today rubbished accusations that the Government had surrendered Ireland's sovereignty.

As the International Monetary Fund and European officials pore over the nation's books, Mr Cowen said the economy remains strong and sustainable.

"There is no question of loss of sovereignty for Ireland," the Taoiseach said.

The Government has faced a barrage of criticism from the Opposition, on the airwaves and in newspaper editorials at home and abroad after it was confirmed the IMF and EU were beginning meetings with the Government in Dublin.

There has also been repeated accusations that ministers have tried to cover-up the extent of the negotiations between officials which first took place in Brussels late last week.

Professor Patrick Honohan, Governor of Ireland's Central Bank, brought some clarity early today when he said he expects the country to get a loan worth tens of billions through an IMF-EU rescue package.

Finance Minister Brian Lenihan has said another option being examined would be contingency capital - effectively a multibillion emergency credit line or overdraft for banks.

Mr Cowen said in currency terms the country shares its sovereignty with the Euro partners and is working with them to find an overall solution to wider problems.

"It will be the sovereign decision of the Irish Government on behalf of the Irish people that will decide what shape any package would be where we can decide that's in our best interests," the Taoiseach said.

"At the moment we are in the process of working out what the best options are."

Following a declaration from Tanaiste (deputy prime minister) Mary Coughlan that Ireland's corporation 12.5% tax rate was non-negotiable, Mr Cowen said the Lisbon Treaty ensured taxation was a national issue for sovereign governments.

But it was in the interest of Ireland to work with its EU partners to make the banking sector viable and functioning, he added.

"We know this is an urgent issue, we know this is an important issue and any decisions to be taken by government will be on our own responsibility on the basis of a full analysis being taken," he said.

Mr Cowen repeated that "no formal application" has been made for a bail-out or loans.

However, "technical discussions" with the EU were intensifying since the meeting of EU finance ministers in Brussels earlier this week, he said.

"When all of those implications have been worked out - and they haven't all been worked out, and no specific proposal has been put to the government - it is then that the government will determine what is in the best interests of the country at this time," he said.

Accepting he has come under intense criticism within Ireland, Mr Cowen insisted he was carrying out his responsibilities conscientiously in the public interest.

The position of the government was "fair, valid and responsible", he said.

"We will determine our own future and we will work with others who offer technical and other assistance to us on the basis of membership of a currency area," Mr Cowen said.

UK Prime Minister David Cameron said he did not want to "speculate" about Ireland's position when he was asked by MPs today about the likelihood of a bilateral bailout.

Speaking to the Commons liaison committee, Mr Cameron said: "I don't want to rule things out, but I don't think we should be speculating."

He added: "In any event if these things were to happen one would want to have an early discussion in the House of Commons."

European Commission president Jose Manuel Barroso said Ireland was making enormous efforts to combat the crisis.

"I feel confident that the four-year fiscal plan of the Irish Government will be presented soon and next year's budget will prove that 2014 target date for correcting excessive deficit is firm and credible," Mr Barroso said.

He said Ireland had very specific problems to address, noting the funding turmoil in banks.

"This must be done speedily and decisively to pave the way for full confidence to be restored," he said.

"In this context, the Irish authorities are committed to working with the Commission, ECB and IMF, to determine the best way to deal with market risks, especially as regards the banking sector.

"That was the message we've got in the Eurogroup. And indeed I welcome the clear will of the Eurogroup to take determined and coordinated action to safeguard the financial stability of the euro area.

"We have the necessary financial backstops to do so."

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