Written by Editorial Staff
November 23, 3:45 PM
At stake is the future course of the potentially $135 billion EU and IMF rescue of Ireland, a nation heading toward bankruptcy next year because the government cannot pay an ever-escalating bill to save its state-backed banks.
Ireland’s deficit this year is 32 percent of gross domestic product, the highest in Europe since World War II. Its banks are running short of cash because they can’t borrow on open markets.
The Irish Cabinet gathered at Cowen’s office to complete a four-year plan for unprecedented budget cuts—a condition of Ireland’s international bailout. The plan, which proposes to slash $20 billion from the country’s 2011-14 budget deficits through a combination of cuts and tax hikes, is to be published Wednesday. The 2011 budget will follow Dec. 7.
Cowen conceded Monday night he must call an election next year but sought to delay it as long as possible. His hand was forced when the junior party in his coalition, the Greens, said it would withdraw support once the 2011 budget passed.
The Greens said they expected the country to hold an election by late January, but Fianna Fail officials say the budget will require multiple votes on different tax increases, which could drag the process into February.
Cowen pleaded with opponents not to force him from office until the budget becomes law and the EU-IMF money is flowing into Irish banks. But opposition lawmakers contend if Cowen resigned immediately and dissolved parliament, an election in mid-December could lead to the new government’s revised budget being passed by Christmas.
But Transport Minister Noel Dempsey in Fianna Fail called that schedule “quite impossible.”
The Associated Press contributed to this report.