The National Assets Management Agency will take control of Ireland's top 50 property developers who have loans of €30 billion by Christmas, it emerged today.
The agency will take on €22 billion of loans for properties based in the UK the majority of which are within the M25 motorway around London.
That area is enjoying a recovery in the property market in advance of the 2012 Olympics.
Ireland is spending €400m more than it is raising in taxes every week, that means just keeping the country running requires huge borrowing.
That money is raised by the National Treasury Management Agency.
The head of the organisation, Dr Michael Somers, says attitudes from international lenders to Ireland have improved in recent weeks.
But his annual report shows that in four years €2 of every €10 collected in tax will just go to pay the interest bill on our national debt. The current rate is €1 out of €10.
The agency said it had so far raised €21.7 billion on the bond markets. It is aiming to raise €25 billion to fund the Exchequer deficit and a €5 billion bond which matured earlier this year.
This afternoon, the premium demanded by investors to hold 10-year Irish government bonds rather than safer German Bunds fell to its lowest since June after the NTMA statement.
The spread of Irish bond yields narrowed to 1.81 percentage points against Bunds. A lower spread means the cost of borrowing for Ireland is less expensive.
The NTMA says 9.4% of tax revenue will go to pay interest on the national debt this year, up from 3.8% last year. The agency says this figure is likely to rise substantially in the coming years - reaching 18.7% in 2013. But it says that this is no greater than the levels of the mid-1990s.
The NTMA is also responsible for NAMA, the agency which will buy back bank loans to property developers.
The NTMAsays Ireland's national debt is forecast to rise to 73% of economic output by 2013, without taking into account debt issued in connection with NAMA.
But the NTMA says it is possible that NAMA debt may be classified as outside the Government sector by the EU.
Despite legal action by ACC against developers, the Minister for Finance, Brian Lenihan, says the plan won't be derailed.
Mr Lenihan says he doesn't want NAMA to be a happy hunting ground for lawyers.
The legislation setting up NAMA will runs to 200 pages and will be published in next ten days in draft form.
It will be complex and controversial, which is understandable seeing as it is the biggest financial commitment in the history of the State.
