IRISH BANK DEAL:PUBLICATION OF the Government's bank guarantee scheme has been deferred until all the details have been sanctioned by the EU Commission and the full scope of the schemes devised by other EU countries becomes clear.
At a special Cabinet meeting last night, Minister for Finance Brian Lenihan briefed colleagues about the detail of the scheme, but it is not expected to be published until later this week or even next week.
Earlier the Taoiseach told the Dáil that the scheme was at an advanced stage, with work being done on it by the Department of Finance, the Central Bank and the Financial Regulator.
"I cannot say exactly when these will be finalised. There will be a need for discussion between the authorities and the EU Commission to ensure the scheme meets state-aids and competition requirements, which is important. This is an evolving situation," said Mr Cowen.
"The Government is anxious to enable this process to proceed and be completed, including the consideration of draft schemes by the House, as soon as possible."
According to Government sources, a detailed scheme has been prepared but intensive consultations are continuing with officials of the EU competition commissioner Neelie Kroes about all aspects of the plan.
Having fallen foul of the EU after the original announcement of the plan last week, the Government is anxious that the detailed scheme should be devised after full consultation with the commission.
Attorney General Paul Gallagher is involved in the drafting of the scheme to ensure it complies with EU competition law.
After a meeting in Luxembourg over the past two days with his EU colleagues, Mr Lenihan has expressed confidence agreement can be reached with the commission on the scheme.
The commission had initially raised concerns about aspects of the scheme possibly being in breach of EU competition and state-aid rules. However, Ms Kroes said after her meeting with Mr Lenihan that the Government's intentions on how the bank guarantee legislation would be implemented had been clarified.
The fact that the Danish government adopted a plan broadly based on the Irish model and that other countries are being forced to come up with far-reaching solutions has also helped to take the pressure off Ireland.
As well as being briefed on the banking crisis last night the Cabinet also moved into the final phase of drafting next week's budget. Ministers will have to agree before the end of the week on what is expected to be the toughest package of spending cuts and tax increases since the late 1980s.
The budget measures for 2009 will be announced to the Dáil next Tuesday.
Labour leader Eamon Gilmore attacked the Government for so far failing to put in place any new initiatives to tackle the downturn in the economy. "What people who are losing their jobs are asking is, are they likely to get work again?"
Fine Gael deputy leader and finance spokesman Richard Bruton said that, based on the latest ESRI report, there would be more than 300,000 people on the dole by the end of next year.
"The Irish economy is now heading for more than 300,000 people out of work by the end of next year. This recession has been driven by Brian Cowen's reckless budgets over the last four years, and is not simply due to international factors."
He said the ESRI's report confirmed Fine Gael's analysis that the crisis was caused by a "structural problem" that would not be solved by a return to trend growth as the wasteful spending increases approved during Mr Cowen's budgets were based on a temporary tax windfall from the property sector, which was now disappearing.
