Irish government awaits trouncing in vote for seat

By Padraic Halpin

DONEGAL, Ireland (BestGrowthStock) – Ireland’s government is likely to see its majority cut to two when the results of an election for a vacant parliamentary seat are released on Friday.

But despite the expected rebuke from voters unhappy about cutbacks to qualify for an IMF/EU bailout, the government has said it is confident about being able to pass a budget due on December 7.

Failure to pass the 2011 budget would deepen the country’s crisis and destabilize the euro zone. Finance Minister Brian Lenihan said in a speech to the American Chamber of Commerce in Dublin on Thursday he was confident the budget would go through.

“I am quite satisfied from my discussions both with the parties in government and the various public representatives in Dail Eireann (parliament) that there is a majority for this budget and that it will pass,” he said.

The Fianna Fail-led government, which agreed this week to accept an IMF/EU bailout, expected to be about 85 billion euros ($113.6 billion), is predicted by opinion polls to lose the Donegal seat to the nationalist anti-European Sinn Fein.

That result, due on Friday afternoon, would leave it a majority of just two — both independents who have said they might vote against the budget.

Fianna Fail’s junior coalition partners, the Green Party, said this week they would pull out after a vote on the budget, forcing an election early next year.

The main opposition center-right Fine Gael party has not said how it will vote on the budget.

SENIOR BONDHOLDERS

The government unveiled a four-year plan of 15 billion euros in tax rises and spending cuts on Wednesday, but this has done nothing to reassure investors who are still waiting to find out details of the bailout, and jittery about Irish bank debt exposure.

Fine Gael, which is likely to lead the next government, said it would not be bound by the terms of the four-year plan, although it has said it would stick with the main target of 15 billion euros in cuts.

Fine Gael also said it would be prepared to make senior bondholders — who rank on a par with depositors in banks — to shoulder some of the burden of cleaning up the banking sector.

Despite government assurances to the contrary, speculation persists that senior debt of Irish banks, which has so far been protected, may be restructured as part of negotiations with the IMF and the EU for the bailout for Ireland and its banks.

A European Commission spokesman said on Thursday the bailout talks, which are taking place in Dublin, would be wrapped up by the beginning of December. Markets expect an announcement on Sunday so that investors will have time to digest the terms of the deal before trading begins on Monday.

The harsh measures, including a cut to the minimum wage, have fueled complaints from Irish people that taxpayers are being punished to bail out bankers and property developers.

(Writing by Carmel Crimmins; additional reporting by Lorraine Turner and Jodie Ginsberg; editing by Myra MacDonald)

Irish government awaits trouncing in vote for seat