Ireland Needs Help, Finance Minister Admits

Irish Finance Minister Brian Lenihan will recommend that the country apply for international funding to stay afloat, he said Sunday, reversing days of Irish insistence that Dublin does not need help. The aid package would involve "tens of billions" of euros, he told Irish state broadcaster RTE. He made the comments shortly before the government meets to finalize a deficit-slashing budget. Dublin had insisted for more than a week that it doesn't need money from abroad to stay afloat despite the crisis, but the European Union and International Monetary Fund began discussing a possible bailout days ago. Fears that Ireland will be swamped by a crisis in its banking sector have put strain on the euro and markets, and other European countries have been pressing Dublin to apply for help.

(CNN)

Irish Minister of Finance Brian Lenihan arrives at the RTE studio in Donnybrooke, near Dublin, on November 21, 2010. Irish Finance Minister Brian Lenihan said he would recommend to a cabinet meeting that the government should apply for a financial bailout programme from the EU and the IMF.

Irish Finance Minister Brian Lenihan will recommend that the country apply for international funding to stay afloat, he said Sunday, reversing days of Irish insistence that Dublin does not need help.

The aid package would involve "tens of billions" of euros, he told Irish state broadcaster RTE.

He made the comments shortly before the government meets to finalize a deficit-slashing budget.

Dublin had insisted for more than a week that it doesn't need money from abroad to stay afloat despite the crisis, but the European Union and International Monetary Fund began discussing a possible bailout days ago.

Fears that Ireland will be swamped by a crisis in its banking sector have put strain on the euro and markets, and other European countries have been pressing Dublin to apply for help.

The EU and IMF bailed Greece out to the tune of 110 billion euros (currently $150 billion) in May of this year. Lenihan seemed to be signalling that an Irish rescue package would be smaller.

A "correction" of 6 billion euros ($8.2 billion) will need to be made in the next budget, the government said Sunday as it announced the cabinet meeting.

The country is trying to cut its deficit to 3 percent of GDP by 2014, the government says.

The new budget will be announced "in the next days," the government said.

The Irish government has pumped billions of euros into Irish banks to keep them afloat, effectively nationalizing most of them. The European Central Bank is lending money to Irish banks because other banks won't.

Officials from the International Monetary Fund and European Central Bank were in Ireland on Thursday to examine the country's debt crisis -- a visit that could result in a substantial loan, the head of the Irish Central Bank said.

Irish Finance minister Brian Lenihan arrives for the Eurozone finance ministers (ECOFIN) meeting on November 17, 2010 at the EU headquarters in Brussels. Eurozone finance ministers meet amid market tensions over Ireland and Portugal and concern for the stability of the 16-nation zone.

The bank's governor, Patrick Honohan, told state broadcaster RTE the negotiations with the IMF and European officials were not about a bailout, but would lead to a loan of tens of billions of euros to Ireland.

The money would go directly into Irish banks to shore up investor confidence, he added. The banks, many of which have been nationalized, are unable to loan to other banks.

One analyst said Ireland has no choice now but to accept outside money.

"In actual fact Ireland as a country, in financial markets, has no reputation now. We've got to rebuild it, and the reason you rebuild it -- or how you rebuild it -- is you rebuild your balance sheet," author and economist David McWilliams told CNN Thursday.

"The situation is, if there is no money, we can't pay. And there is no money. That's why the IMF are here. If we had money, they wouldn't be here."