UPDATE 1-Ireland in no hurry on budget plan as world frets

Published 11/16/2010, 03:00 PM
Updated 11/16/2010, 03:04 PM

* 4-year plan may be published next week; nothing definite

* Euro zone ministers discuss Ireland; markets spooked

* Cowen wants time to prove Ireland can sort itself out

* A bailout would be a humiliation for the government

(Adds more detail)

By Carmel Crimmins

DUBLIN, Nov 16 (Reuters) - Ireland's government is no closer to publishing a four-year plan for tackling its budget deficit despite its financial crisis which is vexing European Union chiefs and provoking a sell-off in world stocks and the euro.

Prime Minister Brian Cowen told parliament on Tuesday that his government was still discussing what fiscal measures to take to tackle the worst deficit in Europe, despite growing anxiety in Brussels that Ireland's woes could destabilise the euro zone.

"I said before that I had hoped it (the four-year plan) would be available for publication, assuming approval, ... next week but I can't anticipate the outcome of discussions in relation to it. We are working to an indicative schedule," Cowen said.

The deeply unpopular premier is trying to resist pressure from the European Central Bank and euro zone peers to tap emergency funding that would impose tough conditions and make it even more difficult for his government to cling on to power.

Cowen wants time to prove that Ireland can handle its finances but a delay in the four-year plan, which was originally meant to be unveiled in mid-November, and the information vacuum that has ensued is doing his cause no favours.

World stocks fell for the seventh straight session and the euro dropped below $1.35 amid concerns Ireland's sovereign debt crisis could destabilise other economies in the euro zone such as Portugal and Spain.

LAUGHING STOCK

The government changed the parliamentary schedule on Tuesday so Cowen could issue a statement on the economy, raising expectations at home and internationally, that an important announcement was imminent.

Instead, he reiterated the government's previous goals, prompting criticism from the opposition benches.

"I'm not quite sure why you made this statement today," said Eamon Gilmore, the leader of the centre-left Labour party.

"I'm not sure what it adds to sense of confidence or lack of it in the country. It certainly doesn't add to clarity about what is taking place at the moment in relation to our finances."

After initially winning plaudits for taking swift action to deal with Ireland's deteriorating finances, Cowen has lost credibility at home and abroad for having to ratchet up the cost of bailing out the banks, putting a heavier strain on a weak economy and stretched national finances.

Any external aid package could see the EU and the International Monetary Fund impose harsher fiscal measures than Cowen and his fragile coalition are planning.

A bailout would be a humiliation for Ireland and in particular for Cowen, whose Fianna Fail party prides itself on its role in the fight for Irish independence from Britain.

On Tuesday Enda Kenny, the leader of the main opposition party warned Cowen in parliament about letting someone else make decisions for Ireland.

"This is a democracy and people died on the street for it, it will not be closed down by incompetence. It will not become the laughing stock of Europe." (Reporting by Padraic Halpin, editing by David Stamp)

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