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Ireland announces record budget cuts

05 November 2010 03:51 (UTC +04:00)

Baku-APA. The Irish government has announced plans to make 15 billion Euros in budget cuts to reduce the country’s deficit and outlined the effective date of the cuts, APA reports quoting Press TV.

In what has been described as "a significant frontloading," the government said it would cut 6 billion Euros in 2011 aimed at reducing the deficit to 9.25%-9.5% of the GDP (Gross Domestic Product), reported the state-run BBC on Thursday.

By 2014, the Emerald Isle’s government plans to bring down the deficit to as far down as 3% of the GDP.

The government says savings would be made through spending cuts and higher taxes, thus improving the living standards of all its citizens.

More details on the measures to be taken by the Irish Government will be released later this month as its four-year budget plan is implemented.

Finance Minister Brian Lenihan said the cuts underlined the â€œstrength of our resolve to show that the country is serious about tackling our public finance difficulties.â€

"But our spending and revenues must be more closely aligned. This is the only way to ensure the future well being of our society," he added.

The announcement contained few surprises, according to analysts, who said that markets were waiting for further details on the spending cuts and tax rises before passing judgment on whether the cuts were realistic.

"I think committing to front-load the cuts sends a good signal to the markets that Ireland is serious about fiscal consolidation," said Oliver Hogan at the Centre of Economics and Business Research.

Ken Wattrett, chief European economist at BNP Paribas, said the government faced a difficult dilemma. He added, â€œ[The government] needs to deliver these cuts to stabilize its public finances and win its credibility back, but at the same time it will probably push its economy into a deeper recession."

A number of countries have recently announced measures to reduce budget deficits that rose dramatically during the economic downturn, most notably Greece and the UK.