On a day that was as cold and dismal as something out of Dickens, Ireland's Parliament voted Tuesday to accept the severe austerity budget presented by Prime Minister Brian Cowen.
The vote was just the first in a series required to formally put in place the 2011 budget that plans to slash 15 billion euros from Ireland’s spending. Citizens contemplating a bleak future of cuts to social welfare programs, education, and unemployment also faced the prospect of a range of higher taxes. Another 2 billion euros are slated to be raised by tax adjustments that will hit not just those already taxed, but segments of the population hitherto exempt.
The Parliament’s mood was “resigned and subdued rather than angry and boisterous,” according to a comment in the Irish Times. The Irish Parliament’s opposition parties still spoke out against cuts that member after member criticized as endangering any future hope of prosperity. But the European Commission (EC) and the International Monetary Fund (IMF) approved, signaling that Ireland’s rescue package should indeed go through on a vote later in the week.
A Reuters report quoted an EC spokesman, Amadeu Altafaj, as saying, “It is a successful first step towards the implementation of the program that was agreed with the EU and the IMF.” Speaking at a news briefing, Altafaj went on, “It is an ambitious and indispensible tool for the redressment of the situation. There is the right balance between revenue and expenditure measures.”
The IMF has scheduled a board meeting on Friday to discuss the first portion of the joint EU/IMF rescue package of 85 billion euros, a loan of 22.5 billion euros. Dominique Strauss-Kahn, IMF’s managing director, will go to Washington from Europe to chair the meeting. An IMF spokesman said that body welcomed the vote by Ireland, adding, “This is a clear sign of Ireland's strong commitment to tackle its problems and harness the impressive growth potential of this open and dynamic economy.”
Ireland’s bond risk premiums fell against the Bund to their lowest levels in a month, in expectation of the budget’s approval.