Ireland will seek savings well above an initial target of 3 billion euros ($4.2 billion) in the 2011 budget, Minister for Finance Brian Lenihan said on Sunday. Ireland is under pressure to demonstrate it can shrink the worst budget deficit in the European Union to allay concerns the former "Celtic Tiger" economy may need to tap external assistance to shore up its finances.
Local media reports have said that Lenihan will seek upto 4.5 billion euros in adjustments in the 2011 budget, his fourth austerity plan in two years.
"Clearly the figure this year will be well above the existing figure of 3 billion," Lenihan said in an interview on national broadcaster RTE.
The task facing the government, the most unpopular administration in modern Irish history, has been compounded by a less rosy global outlook which will likely trip up a return to growth in the heavily trade-dependent Irish economy this year.
"The world conditions for the next three years are not as good as has been predicted and that creates difficulties in terms of how we deal with our deficit," Lenihan said. Next month the finance minister is due to unveil a detailed four-year plan for getting the country's deficit to below 3 percent of gross domestic product (GDP), the EU limit, by 2014.
A mammoth bill for cleaning up the Irish banking sector, which could exceed 50 billion euros in a worst-case scenario, will help push the shortfall to an eye-watering 32 percent of GDP this year. The government's junior coalition partners, The Greens, called this week for the formation of a cross-party national government to give investors confidence that the four-year plan will be implemented.