Predictions that the Irish economy would resume growth in the second half of 2010 appear correct based on recent data, Minister for Finance Brian Lenihan said today.
Mr Lenihan also said it appeared the State would cut its budget deficit in line with EU rules by 2014.
Speaking in the Dáil, as he presented legislation to allow the State to disburse €1.3 billion in aid to Greece, Mr Lenihan said Ireland would continue fiscal reforms to reduce the deficit to 3 percent of gross domestic product by 2014.
"The €3 billion adjustment for next year's budget will challenge us but we will achieve it because we must," Mr Lenihan told TDs.
Greece's predicament showed how important it was Ireland had already started cutting its spending last year, he said.
Last year Ireland had the biggest deficit in the European Union compared with the size of its economy, at more than 14 per cent of GDP.
"If we had not taken this tough action we would now be in the unenviable position of having to take even harder measures to stabilise our economy than those now being put in place by Greece," Mr Lenihan said.
Mr Lenihan said most commentators shared his forecast the economy would bottom out by the middle of the year and resume growth in the second half. "In fact some are more sanguine about our economic prospects," he added.
He said the legislation allowing the payment of the aid to Greece as part of a wider euro zone rescue deal committed the State to borrow an additional €1.3 billion.
Labour finance spokeswoman Joan Burton said Ireland had benefitted greatly from support provided by its European neighbours and that it was now time to give something back.
"When Ireland was on its knees, Europe didn't abandon us," she said.
"With Greece now at the mercy of global bond markets, it is our duty to hang together. If not, we may well hang separately."
Fine Gael finance spokesman Richard Bruton said that if the new EU initiative was to succeed, there needed to be robust scrutiny of the plan.
"The Eurozone is in deep crisis because of design flaws when it was first established. These design flaws were not carefully watched after it was put in place. It has now developed into a full-blown crisis," he says.
Reuters