BRUSSELS (MNI) – Ireland will begin talks with the European Central
Bank, European Commission and the International Monetary Fund about the
best way to stabilise its economy, the country’s Prime Minister Brian
Cowen told the country’s parliament Wednesday.

“There are discussions that will take place…to find a credible,
efficient solution that will provide assurance to the markets,” Cowen
told lawmakers. The debate is being shown live on the web.

“Officials are coming over tomorrow… there has been a
constructive engagement with them… and that will continue,” Cowen
assured.

He said he couldn’t pre-empt the outcome of the “urgent”
discussions and that he wouldn’t put a time frame on when the talks
might conclude. Ireland is trying to avoid asking for a loan deal,
preferring to deal with its debt and deficit problems on its own.

“The central bank and also the Department of Finance, those are the
people that will be involved at an official level,” Cowen said, adding
that the country’s debt agency, the NTMA, will also partake in the talks
with the so-called EU troika.

Ireland is planning E15 billion of cuts over the next 4 years to
bring its deficit back below the EU’s 3% limit, but the market doesn’t
believe it will be able to cut its debt burden without external help.

Slower than expected growth and the cost of bailing out its banking
system will push Ireland’s budget deficit to 32% of its GDP this year.
The Irish government has committed to getting the deficit below the EU’s
3% limit by 2014. Stripping out the banks, the deficit will be around
11.9% this year, still one of the largest in the Eurozone.

Some Eurozone finance ministers have expressed concerns about a
contagion effect and have said they stand ready to offer Ireland
support. UK Chancellor of the Exchequer George Osborne has also pledged
UK support to the country.

“I want to make it very clear, that there has been no dictation to
anybody,” Cowen told the parliament.

He added that Ireland’s Eurozone partners were supportive and the
country’s four-year deficit reduction plan “is supported by all in the
Eurogroup.”

“We want to ensure, as quickly as possible, that we have a banking
sector which can access funds,” Cowen said. His government, he said,
would do whatever is in the national interest “to bring about growth,
and stability, and recovery.”

Cowen’s critics claim the Irish government tied the fate of the
country to its embattled banking system when it offered to bail them
out.

“Whether we like it or not, that guarantee was necessary,” Cowen
countered, adding that it was now “beyond dispute” that the banking
sector guarantees were needed, but it was politically convenient for the
opposition to suggest he should have made a different choice.

“Most countries in Europe have had to provide bank guarantees,
interventions to ensure that the financial system is stabilised,” Cowen
reminded.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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