The European Union, the International Monetary Fund, the European Central Bank and Ireland have come to an agreement on Sunday under which the latter will request a bailout. Such aid package is expected to amount up to 80 – 90 billion euros, and will pair with a government austerity plan worth 15 billion euros. The bailout plan will be implemented over a span of three years, details will drawn starting on Monday, but it is widely anticipated to be smaller than Greece's 110 Bn euro package devised in May. As reported at the end of last week, Britain is to come up with about 7 Bn pounds in bilateral loans.
Austerity plan is reported to include a revamp of the property tax as well as trimming benefits and services. The widely talked about 12.5% corporate tax, which many euro zone countries deem as unfair competition, is also a candidate for modification. A large chunk of the money will go to the banks, which Irish Finance Minister said are bound to be smaller than they had been.
One of the main goals of convincing Ireland to take a bailout was to catch the debt disease on time, preventing a contagion effect on other peripheral European countries such as Portugal and Spain. Reuters reports that the German finance minister Wolfgang Schaeuble believes such effects can be staved off: "If we now find the right answer to the Irish problem, then the chances are great that there will be no contagion effects."
Others, however, are not so sure and believe that Greece was the beginning but Ireland is the confirmation that one by one, debt ridden European countries will succumb under their own mounting borrowing costs. For many, sights are slowly turning, and by the time the Irish bailout is finalized, will be fixed upon Portugal.
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