Ireland's new government will stick to the fiscal targets laid down in an EU/IMF rescue package, a source familiar with the coalition deal agreed between the two main political parties said on Sunday.
Ireland's prime minister in-waiting Enda Kenny is under huge pressure to persuade European partners to cut the cost of the 85 billion euro ($119 billion) bailout and the coalition agreement, clinched after midnight, seems designed to curry favour with the fiscally conservative Germans.
Kenny's centre-right Fine Gael party has persuaded junior partner, the centre-left Labour party, to drop its demand that Ireland be given an extra year to get its budget deficit under control and to agree that the bulk of the adjustment should be achieved through spending cuts, said the source.
The new government will aim to shrink the shortfall from nearly 12 percent of Gross Domestic Product (GDP) currently to below an EU limit of 3 percent by 2015, a deadline already okayed by Brussels last year amid concerns spluttering growth would prevent Dublin meeting an original target date of 2014.
The source, who declined to be named because the two parties have yet to publish their programme for government, also said Fine Gael's finance spokesman, Michael Noonan, would be the administration's finance minister.