Minister for Finance Brian Lenihan has insisted that Ireland has not lost its sovereignty and will not have to resort to the European Union's bank bailout fund.
Mr Lenihan said: 'We have put our public finances on a sustainable basis in the last two years, we have done massive corrections in our public debt, in our deficits and we will continue to do so.'
Asked why markets did not believe in Ireland, Mr Lenihan said the Government is taking steps to resolve difficulties both in the banking and public finance side.
He said that Ireland has 'a strong under-lying economy... we are paying our way in the world, unlike some of the other sovereigns that have difficulties in Europe.'
On the recent increase in the bonds markets, Mr Lenihan said 'it is entirely caused by the fact that doubt has been cast in certain European states about whether peripheral European states will be able to repay their sovereign debts.'
Mr Lenihan rejected the suggestion that the crisis is a result of his incompetence.
He said: 'I've been Minister for Finance here since 2008, dealing with these problems, tackling them on a daily basis, and making considerable progress in that regard.'
Mr Lenihan also said the economic problems were not due to the bank bailout but rather because of 'the very wide gap between public expenditure and public receipts'.
The Minister said that the country's workforce of 1.9 million people had shown 'huge adaptability in the present crisis'. He said that tax receipts went back to 2003 levels and they will have to increase and augment them to 2005-2006 levels and adjust expenditure the same way.
He said that Ireland had not lost sovereignty, saying: 'Ireland has always been linked to a fixed currency arrangement. We are currently linked to the Euro, we were linked with Sterling for more than 150 years.
'Small countries don't have the luxury of having a separate currency, they link themselves to another currency, there's nothing unusual about that.
Fine Gael Finance Spokesperson Michael Noonan accused Minister Lenihan of putting pressure on department officials to revise down the level of cuts needed for 2011.
Mr Noonan said department officials had told him that the adjustment they were looking for was €7bn for 2011.
He said they withdrew the figure under political pressure from the government and the Minister.
Mr Lenihan said no such direction had been made to his officials.