Irish PM Vows to Cut Budget, Negotiate Bailout

Irish Prime Minister Brian Cowen declared Monday he won't resign now despite pressure within his own unraveling government, because he's determined to pass an emergency budget and negotiate a massive EU-IMF bailout before he goes.

Cowen said he still hopes to win parliamentary approval on Dec. 7 for a budget that would slash euro6 billion ($8.2 billion) from the 2011 deficit.

He also declared his determination to stay in power long enough to reach a deal with European Union and IMF banking experts on a bailout fund expected to reach nearly euro100 billion ($140 billion).

The Irish government confirmed on Sunday that it had formally requested a financial aid package to shore up the country's debt-laden banking sector.

European Union finance ministers quickly agreed in principle to the bailout, saying it "is warranted to safeguard financial stability in the EU and euro area." All sides said Sunday that further negotiations loomed.

The actual details of the package, which is expected to be not far short of euro100 billion ($136.74 billion), are not expected for a few days yet as Irish officials sit down with counterparts from both the European Union and the International Monetary Fund. The news boosted stocks in Europe on Monday.

Cowen spoke hours after the junior party in his government, the Greens, announced it intends to force a government collapse in January after the budget and bailout have been approved.

Cowen had just left a meeting of his own Fianna Fail lawmakers, several of whom said he had lost credibility, wasn't trusted by the nation and must quit immediately for the good of the country.

But Cowen fought back, surprising many who had expected his resignation after two crisis-prone years at Ireland's helm.

He insisted he would dissolve the parliament for an early election only "after all the necessary arrangements have been put in place to give effect to a very important budget which it is imperative to pass."

Cowen declined to say when he expected that dissolution to come. But he said dissolving the parliament now for a three-week election contest would jeopardize the EU-IMF bailout that Ireland agreed to receive Sunday. Dozens of IMF and European Central Bank officials are currently in Dublin negotiating its terms.

"Any further delay in this matter would in fact weaken our country's position," Cowen said on the steps of his Government Buildings office, senior Cabinet ministers flanking him.

"The most important issue is the passing of this budget on the 7th of December," he said. "Not to proceed with it would do grave damage to our interests."