Irish Government to inject more funds into bailed-out banks

Minister for Finance Brian Lenihan announces a harsher Budget in December than originally planned.

Minister for Finance Brian Lenihan announces a harsher Budget in December than originally planned.

The Irish Government confirmed on 30 September 2010 that further public funds will be given to bailed-out banks Allied Irish and Irish Nationwide.

Allied Irish Bank will receive €3bn in additional funds and Irish Nationwide will get a further €2.7bn from the State.

Finance Minister Brian Lenihan also disclosed that the cost to taxpayers of sorting out the State rescued Anglo Irish Bank would be about €30bn.

It is that the estimated final cost of repairing the Irish bank system could come to €46bn.

The figures unveiled by the Government mean an increase in Ireland's deficit to 32% for this year.

Mr Lenihan said the proposed spending cuts will have to be increased, and a harsher Budget than originally planned will have to be implemented in December 2010.

The Finance Minister issued a statement in which he said that greater certainty on the final costs of repairing the Irish banking system would provide reassurance to the international markets.

Market analysts and Eurozone finance ministers welcomed the figures, saying they were a helpful clarification of the situation in Ireland.

The Governor of the Central Bank of Ireland Patrick Honohan confirmed that the latest injection of funds into the Irish banking system could be achieved without external help.

The Irish Government insisted that the current level of State support to the nationalised banks remains manageable, but opposition parties said the Government's economic policy had failed.