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7 December 2010
Last updated at 11:39 ET
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The Irish government has begun presenting the toughest budget in the Republic's history to parliament
The Irish government has begun presenting the toughest budget in the Republic's history to parliament, with the first key vote set for 7pm.
Finance Minister Brian Lenihan is planning 6bn euros (£5bn; $8bn) of cost cuts for the 2011 budget.
It is part of a deal to secure an 85bn-euro bail-out from the European Union and International Monetary Fund.
Despite the Fianna Fail/Green party coalition's slim majority, the budget is expected to be passed.
If the budget is cleared by parliament, it will trigger the first tranche of bail-out funds from the EU and IMF.
Growth prediction "The scale of this adjustment is demanding, but it demonstrates the seriousness of our intent," said Mr Lenihan in his opening remarks.
He said that the Irish economy was already showing signs of recovery, and he expected growth to continue over the coming years, driven by exports.
"It is the government's strong view that the economy can continue to grow while we carry out the... National Recovery Plan," said Mr Lenihan.
He said the government would seek to boost growth further via an investment programme equal to 3.6% of the country's economic output.
He added that the state pension funds would also invest in public-private infrastructure projects.
Burden sharing In his speech, Mr Lenihan defended the government's decision - agreed with EU negotiators - to spare the major creditors to the country's banks from any losses on their loans.
It was a collapse in confidence in the Irish banking system in November that triggered the Republic's bail-out.
He said the Irish government could not renege on its commitment to the banks "against the wishes of our European partners and European institutions".
The decision to spare the banks' lenders is thought to have been insisted on by the European Commission and European Central Bank - but not the IMF - as they feared that failing to do so would trigger a Europe-wide banking crisis.
But many in the Republic have been angered by the decision, which leaves Irish taxpayers footing the bill for saving the Irish banks.
Pension cut Among the cost-saving measures announced by the minister was a means-tested 4% cut in current pensions for public sector pensioners.
He said there would be no cut to the state pension this year, but working-age payments would be cut by about 4%.
Further pay cuts for ministers - including the Taoiseach, Brian Cowen - as well as the Irish President were announced alongside a 250,000-euro pay cap on public sector pay.
He announced changes to the income tax system - which he labelled "not fit for purpose" - that would raise additional revenues.
He said child benefits were to be cut by 10 euros a month to 140 euros for the first two children, and by 20 euros to 167 euros for the third child.
Cuts targets The government previously announced cuts under a four-year National Recovery Plan unveiled two weeks ago.
Dublin is looking to save about 15bn euros over the period as it struggles to balance the books, with the biggest cuts of the plan coming this year - between 2010/11.
Surging bond yields - the interest rates Dublin pays to borrow money - forced the government to ask for a bail-out on 28 November, as the Republic could no longer afford to raise money in the financial markets.
Mr Cowen, with his poll rating at a record low, needs to push the budget through to avoid having to call a snap election.
Failure to do so could plunge the Republic into a deeper crisis, one that could help spread contagion throughout the heavily-indebted eurozone.
'Harsh' Mr Cowen's government only has a majority in the Dail, or lower house of parliament, thanks the support of two independent MPs.
One of these MPs, Michael Lowry, pledged his support for the budget on Monday evening.
"This budget is going to be harsh. It's going to be extremely difficult," Mr Lowry told the BBC.
"People will be angry," he said, "but if we are to survive into the future and if we are to restore our economy, these difficult and harsh decisions have to be made."
According to reports, the other independent MP, Jackie Healy-Rae is expected to follow Mr Lowry's lead.
And it is not clear if all opposition MPs will oppose the budget. There has been talk of some MPs abstaining from the vote, strengthening Mr Cowen's hand.
Opposition parties have published their own budget proposals ahead of a general election next year.
But with stringent EU/IMF fiscal targets to hit, most politicians accept that there will be little scope to deviate greatly from the plans being set out.
But it is not essential that all parts of the budget are cleared on Tuesday.
The vote will be conducted via four separate ballots, and the budget must be passed within four months of Mr Lenihan presenting it to parliament.
Are you in Ireland? Will you be affected by the budget cuts? Do you think the proposed cuts are necessary? What are you hoping to see in the budget? Will you take part in the planned demonstration? Send us your comments using the form below.
Send your pictures and videos to yourpics@bbc.co.uk or text them to 61124 (UK) or +44 7725 100 100 (International). If you have a large file you can upload here.
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Please turn on JavaScript. Media requires JavaScript to play.The Irish government has begun presenting the toughest budget in the Republic's history to parliament
The Irish government has begun presenting the toughest budget in the Republic's history to parliament, with the first key vote set for 7pm.
Finance Minister Brian Lenihan is planning 6bn euros (£5bn; $8bn) of cost cuts for the 2011 budget.
It is part of a deal to secure an 85bn-euro bail-out from the European Union and International Monetary Fund.
Despite the Fianna Fail/Green party coalition's slim majority, the budget is expected to be passed.
If the budget is cleared by parliament, it will trigger the first tranche of bail-out funds from the EU and IMF.
Growth prediction "The scale of this adjustment is demanding, but it demonstrates the seriousness of our intent," said Mr Lenihan in his opening remarks.
He said that the Irish economy was already showing signs of recovery, and he expected growth to continue over the coming years, driven by exports.
"It is the government's strong view that the economy can continue to grow while we carry out the... National Recovery Plan," said Mr Lenihan.
He said the government would seek to boost growth further via an investment programme equal to 3.6% of the country's economic output.
He added that the state pension funds would also invest in public-private infrastructure projects.
Burden sharing In his speech, Mr Lenihan defended the government's decision - agreed with EU negotiators - to spare the major creditors to the country's banks from any losses on their loans.
It was a collapse in confidence in the Irish banking system in November that triggered the Republic's bail-out.
He said the Irish government could not renege on its commitment to the banks "against the wishes of our European partners and European institutions".
The decision to spare the banks' lenders is thought to have been insisted on by the European Commission and European Central Bank - but not the IMF - as they feared that failing to do so would trigger a Europe-wide banking crisis.
But many in the Republic have been angered by the decision, which leaves Irish taxpayers footing the bill for saving the Irish banks.
Pension cut Among the cost-saving measures announced by the minister was a means-tested 4% cut in current pensions for public sector pensioners.
He said there would be no cut to the state pension this year, but working-age payments would be cut by about 4%.
Further pay cuts for ministers - including the Taoiseach, Brian Cowen - as well as the Irish President were announced alongside a 250,000-euro pay cap on public sector pay.
He announced changes to the income tax system - which he labelled "not fit for purpose" - that would raise additional revenues.
He said child benefits were to be cut by 10 euros a month to 140 euros for the first two children, and by 20 euros to 167 euros for the third child.
Cuts targets The government previously announced cuts under a four-year National Recovery Plan unveiled two weeks ago.
Dublin is looking to save about 15bn euros over the period as it struggles to balance the books, with the biggest cuts of the plan coming this year - between 2010/11.
Surging bond yields - the interest rates Dublin pays to borrow money - forced the government to ask for a bail-out on 28 November, as the Republic could no longer afford to raise money in the financial markets.
Mr Cowen, with his poll rating at a record low, needs to push the budget through to avoid having to call a snap election.
Failure to do so could plunge the Republic into a deeper crisis, one that could help spread contagion throughout the heavily-indebted eurozone.
'Harsh' Mr Cowen's government only has a majority in the Dail, or lower house of parliament, thanks the support of two independent MPs.
One of these MPs, Michael Lowry, pledged his support for the budget on Monday evening.
"This budget is going to be harsh. It's going to be extremely difficult," Mr Lowry told the BBC.
"People will be angry," he said, "but if we are to survive into the future and if we are to restore our economy, these difficult and harsh decisions have to be made."
According to reports, the other independent MP, Jackie Healy-Rae is expected to follow Mr Lowry's lead.
And it is not clear if all opposition MPs will oppose the budget. There has been talk of some MPs abstaining from the vote, strengthening Mr Cowen's hand.
Opposition parties have published their own budget proposals ahead of a general election next year.
But with stringent EU/IMF fiscal targets to hit, most politicians accept that there will be little scope to deviate greatly from the plans being set out.
But it is not essential that all parts of the budget are cleared on Tuesday.
The vote will be conducted via four separate ballots, and the budget must be passed within four months of Mr Lenihan presenting it to parliament.
Are you in Ireland? Will you be affected by the budget cuts? Do you think the proposed cuts are necessary? What are you hoping to see in the budget? Will you take part in the planned demonstration? Send us your comments using the form below.
Send your pictures and videos to yourpics@bbc.co.uk or text them to 61124 (UK) or +44 7725 100 100 (International). If you have a large file you can upload here.
Read the terms and conditions
Powered by WizardRSS | Best Membership Site Software