Finance Minister Brian Lenihan has said that the outline of the Government's four-year budgetary plan, which is due to be published on Wednesday, has 'broadly satisfied' officials from the International Monetary Fund and the EU.
The €15 billion adjustment will consist of €10 billion of spending cuts and €5 billion of tax increases.
The Govt yesterday decided to officially seek assistance from the EU and the IMF to deal with the country's banking and budget crisis.
The financial rescue package is estimated to be worth in the region of €80-90 billion and its terms will be negotiated over the coming weeks.
Mr Lenihan also said there was no question of changing the 2011 budget, which will frontload much of the cuts.
'I'm quite satisfied on the basis of the discussions to date that the budget that will be presented to Dáil Eireann on December 7 will be our own budget. There have been no requests for any changes in that,' he said.
Meanwhile, the terms of Ireland's financial rescue plan are to be negotiated over the coming days. Following a Cabinet meeting yesterday evening, the Government agreed to make a formal request for a multi-billion euro loan package to the European Union and the International Monetary Fund.
Euro zone finance ministers also held a teleconference to discuss the terms of the Irish request.
The Taoiseach said yesterday that the Government had agreed to make a formal request for funding from the EU and the IMF to ensure the stability of the national finances, the Irish banking sector and the single currency.
But he gave little detail on the terms of the arrangement, which will be subject to more detailed discussion in the next few weeks.
The Minster for Finance said the EU and IMF teams in Dublin will continue their work, focusing particularly on the state of the banks. This will form the basis for the final request.
Mr Lenihan said most of the money allocated to the banks would not be drawn down, but would form an emergency reserve, designed to bring confidence to the markets.
Governments in the Eurogroup formally welcomed the Irish request, as did the European Central Bank, which said financial assistance would come with strict policy conditionality attached.
Germany, France soften corporation tax stance
It is understood Mr Lenihan thanked both Wolfgang Schäuble and Christine Lagarde after both the German and French leaders appeared over the weekend to retreat from a belief that Ireland should increase its corporation tax rate in exchange for a financial rescue.
Speaking at the NATO summit in Lisbon, German Chancellor Angela Merkel said the question of corporate tax was a matter for the Irish Government. At the same meeting French President Nicolas Sarkozy said his personal belief was that Ireland should raise its corporate tax rate, but that it was not a condition for the bail-out.
But European Commissioner for Economic and Monetary Affairs Olli Rehn this morning repeated his earlier comments that Ireland would no longer be a low tax economy.
When asked in an interview with RTÉ if the corporate tax rate was now off the table for good, Mr Rehn said that by Ireland's ceasing to be a low tax country, this did not imply specific measures, but 'it is likely unfortunately to imply tax increases'.
He said that there would be conditions attached to the EU/IMF rescue programme even if the programme were based on the Government's four-year budgetary plan.
Without going into specifics, Mr Rehn said the goal of the European Commission, IMF and ECB teams working in Dublin was that the Government's plan would meet the target of reducing the budget deficit to 3% of GDP by 2014.
The 'conditionality' would be discussed between the international bodies and the Government.
He said the front-loading of the cuts in the Budget for next year would be the core of the plan. When asked if he could foresee Irish banks closing, downsizing or merging as part of the restructuring plan for the banking sector, the Commissioner said it was premature to go into detail, but the objective was to put the sector on a viable path.
On the question of further contagion in the euro zone Mr Rehn said: 'It is essential to stop the financial bush fire concerning Ireland before it becomes a Europe-wide forest fire of financial turmoil.'
Meanwhile, the AFP news agency has quoted an EU source as saying that the Government is willing to widen its corporation tax base in exchange for an international financial rescue, but without changing the 12.5% rate.
'Ireland is considering enlarging the tax net for companies' even if the percentage 'will not change,' said the source, who AFP said was close to a fifth day of EU-IMF negotiations with Ireland.
Some EU countries have long criticised Ireland's comparatively low corporation tax rate, which they say gives it unfair leverage when it comes to securing international investment from global giants such as Microsoft or Google. The average corporation tax rate across the 16 countries that share the euro is 25.7%.
