* Govt's future hinges on clear fiscal roadmap
* Emergency budget 4th attempt since July to cut deficit
* Also expected to present plan for banks' bad loans
By Andras Gergely
DUBLIN, April 7 (Reuters) - Ireland's government prepared on Tuesday to unveil a budget which must present a clear fiscal roadmap or risk endangering its political future and posing a threat to one of the euro zone's basic stability rules.
Finance Minister Brian Lenihan is under pressure to get the budget right after three attempts in nine months to control the deficit which he said could reach 12.75 percent of gross domestic product (GDP) this year without further action.
Ireland's relatively low national debt has allowed European leaders to dismiss as absurd the idea the former 'Celtic Tiger' economy could default on its debt, but it cannot maintain a deficit at four times the EU's 3 percent limit.
"Life may have no dress rehearsal, but sadly emergency budgets do and if Brian Lenihan delivers a performance today as poor as his last one he will be booed off the political stage," the Irish Examiner newspaper wrote in an editorial.
Lenihan is expected to chop between 3.5-4 billion euros ($4.7 billion to $5.4 billion) off the deficit but he signalled on Monday much of it would come from raising taxes rather than the spending cuts favoured by the central bank and economists.
That confirmed a Reuters report last week in which a source said the government would target 1.5 billion euros in spending reductions and between 2-2.5 billion euros from tax hikes, in particular an increase to existing income levies.
Tuesday's budget follows three tightening programmes announced since last July, including an emergency budget in October, which all turned out to be insufficient as tax receipts dried up in a rapidly worsening recession.
"Today must go beyond the traditional pronouncements on taxes and spending in the short-term and instead concentrate on a credible medium-term plan to reduce the gaping structural deficit," said Dermot O'Leary, chief economist at Dublin-based brokerage Goodbody.
Besides tackling Europe's worst public finances, Lenihan will also unveil the broad outline of a plan for the banking sector's bad debts which are weighing on the wider economy and the state's own finances.
Speculation in the media has focused on the creation of a "bad bank" which would remove the soured assets off the banks' balance sheets but would require government capital up-front.
Lenihan, who is expected to speak in parliament for around 35 minutes from 15.45 p.m. (1445 GMT), said on Monday impaired loans would have to be "cleaned off" banks' balance sheets.
Faced with a tight parliamentary majority, Prime Minister Brian Cowen must ensure the support of his party's own backbenchers as well as a handful of independents and junior coalition partners the Greens to ensure the budget gets passed.
"I'm apprehensive but I think the prize for getting this
right and reestablishing confidence and certainty is huge for
business, consumers and everyone who lives in Ireland," said
Patrick Coveney, chief executive of food company Greencore