Irish parliament to vote on EU/IMF bailout

* Vote expected to pass with slim majority

* Parliamentary approval will clear the way for IMF vote

* Govt has said it will tap funds early next year

* Opposition hopes to renegotiate terms of deal

By Yara Bayoumy

DUBLIN, Dec 15 (BestGrowthStock) – Ireland’s parliament will vote on
a controversial multi-billion euro EU/IMF bailout loan on
Wednesday, putting pressure on opposition parties critical of
the aid package ahead of a general election early next year.

Prime Minister Brian Cowen is expected to get the 85 billion
euro rescue package through the lower chamber but his
politically charged decision to seek parliamentary approval has
delayed IMF board approval for its portion of the funds.

The support of two independent MPs will ensure the package’s
passage in the face of Cowen’s shaky majority and the bailout’s
rejection by the centre-right Fine Gael and centre-left Labour
opposition parties.

Both parties have criticised Cowen for seeking external
funds, saying the deal was a humiliating loss of sovereignty.

They have said they will renegotiate the package when they
come to power, as is expected after an election in February or
March, but the reality is that they will have to work within its
targets or risk losing funding.

Fine Gael has said it would try to get a lower interest rate
but Alan McQuaid of Bloxham Stockbrokers doubted that would
work, especially as the rate charged is based on market prices.

Ireland’s debt management agency has said the average
interest rate on the rescue funds is 5.82 percent.

“The politicians may change, but the financial situation
won’t,” McQuaid, Bloxham’s chief economist, said. “I don’t think
there will be much room for manoeuvre. They may think they can
(change) but the reality is much different.”


The bailout is designed to end a two-year banking crisis
that has brought the economy to its knees and sent shock waves
through the euro zone.

In return for 50 billion euros in sovereign funding and 35
billion euros in capital top-ups for its banks, Ireland has
promised to shrink and radically restructure its lenders and
tackle the worst deficit in Europe by 2015 at the latest.

Dublin will squeeze 15 billion euros — equivalent to around
10 percent of annual economic output — from its deficit over
four years starting with the 2011 budget’s record package of 6
billion euros in spending cuts and tax rises.

Some economists have warned that such aggressive austerity
measures will tip the domestic economy into a prolonged
downturn, jeopardising its ability to meet its deficit targets
and deal with its debt crisis.

In an attempt to bring order to the banks, a new law due to
be debated by parliament on Wednesday will give the government
extensive power to restructure the sector, including the power
to impose losses on subordinated bondholders. [nLDE6BD1LA]

There will be a two-hour debate on the bailout package
before a vote at around 1330 GMT, and parliament’s vote in
favour will enable the IMF to approve its 22.5 billion euro
portion of the bailout on Thursday.

Finance Minister Brian Lenihan has said he expects to start
accessing external funding early next year.

“The bailout gives us an opportunity to get our house in
order. We’d have preferred if we’d done proper restructuring on
the banks but that didn’t happen,” Brian Devine, Chief Economist
at NCB Stockbrokers, said.

“We don’t have a choice,” he said, referring to the severe
budget. “We couldn’t fund ourselves in the market. It’s a done
(Editing by Carmel Crimmins and Tim Pearce)

Irish parliament to vote on EU/IMF bailout