The Government is expected to meet with the social partners tomorrow to outline a revised economic plan it hopes will tackle a deteriorating situation in the public finances.
The cabinet met at Farmleigh this afternoon to discuss the plan before breaking for Christmas dinner this evening.
The Government was forced to bring forward the Budget to October this year because of the poor state of the Exchequer finances but the situation is now worse than feared prompting the new plan in January.
The Department of the Taoiseach has taken charge of the “economic and fiscal assessment”, a Department of Finance spokeswoman confirmed on Friday.
Taoiseach Brian Cowen said today: "Actions are being taken by the Government to ensure that Ireland deals effectively with domestic implications of the current unprecedented global economic difficulties and to promote a successful economic recovery." Under the recapitalisation plan, funds will be available to firms such as AIB, Anglo-Irish, Irish Life & Permanent and Bank of Ireland who have until January to put forward proposals.
The scheme mirrors a larger version carried out by the British Government in recent months to protect the balance sheets of several UK banks and to boost their lending.
A decision on a date for the formal publication of the Plan for Economic Renewal has not yet been made, and while it is expected early in the New Year, it could still be unveiled before the Christmas break.
The Department of Finance has said the state may use money from the National Pension Reserve Fund for the recapitalisation scheme. Existing shareholders and private investors will also contribute.
The Irish Bank Officials' Association today gave a cautious welcome to the plan but urged the Government not to go down the route of private investment.
The IBOA also called for further information on the restructuring of the banking sector and its implications for jobs and the terms and conditions of employment.
Mr Cowen earlier discussed Irish and international economic issues with Senator Chris Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee, who was visiting Dublin.
Mr Cowen's spokesman added: "They discussed the current actions being taken by the US administration, including the financial and automotive sectors, and the likely developments in US policy when the new President and new Congress take office in the New Year."