UPDATE 1-Ireland keeps quiet on date of four-year plan

* Speculation govt wants to curb internal dissent with delay

* By-election will likely cut govt majority to two

* Four-year plan was meant to be published in mid-Nov

* Govt plans to distribute cheese to help poor

(Adds more detail)

By Carmel Crimmins

DUBLIN, Nov 5 (BestGrowthStock) – The Irish government side-stepped
questions on Friday about when it will unveil a four-year
austerity plan amid speculation it will delay publishing the
measures in the run-up to a by-election.

Dublin’s efforts to reassure investors it is not on the
brink of a Greek-style meltdown have been complicated by the
government’s shrinking parliamentary majority and uneasiness
among backbenchers that a round of cutbacks will kill their
political futures.

The Irish Times newspaper reported the government wanted to
delay publication of its austerity measures until after a
by-election for an empty parliament seat is held on Nov 25,
leaving as little time as possible for internal dissent before
the 2011 budget, the toughest on record, is unveiled on Dec 7.

The Minister for Agriculture declined to say whether the
four-year plan, which had been earmarked for publication in
mid-November, would now be shelved till the end of the month.

“The government is working intensively on the preparation of
this plan,” Brendan Smith told national radio. “The government
has not yet finalised its work on the four-year plan. It will be
published as soon as possible.”

But the government’s habit of dripfeeding information to
investors and hiking its worst-case scenarios without warning
have spooked markets and made them sceptical about Prime
Minister Brian Cowen’s ability to tackle the worst deficit in
Europe without external assistance.

In a bizarre turn on Friday, Smith said the government would
distribute cheese to people struggling to make ends meet.

“Cheese (will be) made available to assist people who are
living in poor circumstances and are under pressure,” he said.


Cowen is in a race against time to turn the tide of market
opinion against Ireland. He must get borrowing costs down to
more sustainable levels from record highs or else risk
jeopardising Dublin’s ability to tap bond markets in January.

“A delay in the four year plan would have to be a negative,
people want the detail and the earlier they can get it out the
better. The aim is to please the market as soon as possible,”
said Gavin Curran, bond trader at Dolmen Securities.

Ireland said on Thursday it would push through spending cuts
and tax hikes totalling 6 billion euros next year to get its
budget deficit below 10 percent of GDP, and reassure Brussels
and the bond markets that it can get the shortfall under control
by a deadline of 2014.

The first of the four austerity budgets will not be unveiled
until Dec 7 but Curran said Cowen should bring the 2011 budget
forward to avoid lobbying by trade unions and interest groups
which could prompt some backbenchers and Independent MPs, upon
whom Cowen relies on for support, to rethink.

“If they can do it faster it avoids that and the longer this
goes on the less confidence the parliament has,” said Curran.

The by-election in the northwestern county of Donegal is
likely to cut Cowen’s parliamentary majority to just two.

Analysts think he will still be able to get the 2011 budget
passed given that its failure would trigger a general election
that would certainly end the careers of several government MPs.
But the possibility of a failed budget has investors nervous.

The risk premium investors demand to hold Irish paper over
benchmark German bunds rose a touch on Friday to a new peak of
548 basis points despite Ireland’s pledge to frontload 40
percent of its spending cuts and tax hikes next year.

Investors are concerned Ireland’s growth projections are
still too rosy and German plans to create a permanent sovereign
restructuring mechanism in the euro zone that would make
investors pay in the event of a default is not helping.
(Additional reporting by Cecilia Valente; Editing by Angus

UPDATE 1-Ireland keeps quiet on date of four-year plan