Brian Cowen (Laois-Offaly, Fianna Fail)

The continuing attempt to suggest that revenue raising is about paying for the banks or the IMF is a separate question altogether. The reason the Government is raising taxes is because Ireland's taxes were at 2002 levels before the last budget, while expenditure was at 2010 levels. This gap must be closed by reducing expenditure and increasing taxes and this is the reason for the increase in the latter.

As for this specific matter, Ireland had been funding its deficits on the financial markets until interest rates became too high in markets. This was as a result of the Greek crisis in April and the Deauville declaration, whereby speculation on the burning of senior bondholders meant that premium rates on financial markets increased to such an extent that Ireland came out of the market. The Government now has negotiated with the IMF and the European Union an agreement for the funding of this State over the next few years at the rates that are available to everyone else. The IMF rate available to us is what is available to everyone else. Moreover, the European Union rate was struck by the euro group council on the day when the Minister for Finance, Deputy Brian Lenihan, on behalf of the Government, confirmed its acceptance of the deal because Ireland was the first country to come in under the aforementioned new regime. These are the facts.

Since then, the euro group, which is the group of finance ministers for countries in which the euro currency operates, has been considering other wider and deeper measures. The group is deciding on what is the best way because what has been done to date has not brought to the currency the stability the European Central Bank and others would like to see clearly. Further work is to be done in this regard, as we are part of a global issue that has not yet been resolved. In the meantime, however, Ireland has secured for itself a sheltering from this turbulence to some extent because of the provision of a funding mechanism, through this financial package, from the European Union and the IMF. It has enabled us to draw up a four year plan that, as Members are aware, was agreed with the European Commission and that contains continuing policies that will be necessary to close the gap in Ireland's public finances between what is spent and what is earned as a country in respect of taxes. Moreover, we are receiving such funding at a rate that is far less than the rate we would be obliged to pay, were we seeking to fund our deficits in capital markets in the normal way.

This is the position and the simple point I make to the Deputy is that a change in the interest rates on the European Union's side of the equation or package can only happen if everyone agrees to such a development. This is only part of a wider discussion on bringing stability to the currency area generally. Second, in respect of the IMF part of the equation, legislation is to be introduced that will have the effect of reducing the rate of interest from that part of the loan by 15 basis points. These are the facts and this is the position.

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