Ireland must adopt its budget on time despite domestic political uncertainty to conclude talks on a EU and IMF financial programme, economic and monetary affairs commissioner Olli Rehn said today.
"Stability is important," Mr Rehn, who met Ireland's 12 MEPs in Strasbourg today, said when asked about the prospect of early elections.
"We don't have a position on the domestic democratic politics of Ireland but it is essential that the budget will be adopted in time and we will be able to conclude the negotiations on the EU-IMF programme in time.
"The budget needs to be adopted," he added. "Ireland will pass the budget in the time foreseen and certainly sooner than later. Let's get it out of the way and let's move on,'' he said.
Socialist Party MEP Joe Higgins walked out of the briefing with Mr Rehn after two minutes.
Mr Higgins told RTÉ he objected to the confidential nature of the meeting. "What he said was that he could give the party line or else that he could share real information," Mr Higgins said.
The Dublin MEP said it was "simply not acceptable" that Mr Rehn would impart "some secret information that MEPs are supposed to keep secret".
Fine Gael MEPs said after the meeting Mr Rehn told them Ireland’s corporation tax rate was not under review.
“The commissioner has a firm grasp of the fiscal economic and political situation in Ireland and was very supportive of our position,” Jim Higgins, Sean Kelly, Mairead McGuinness and Gay Mitchell said in a joint statement.
“Among the issues discussed was the Irish corporation tax rate. All 11 Irish MEP’s stressed that this is a question for the Irish government and the Dáil. The commissioner agreed that this is not the time to be raising such issues.”
Earlier today, however, Austrian finance minister Josef Proell said he expects a discussion on an "economically viable increase" of Ireland's 12.5 per cent corporate-tax rate in return for European Union aid.
Elsewhere, the Dutch finance minister today said throwing Ireland out of the euro zone or splitting the single currency area into a weak and a strong bloc should be ruled out.
"Throwing Ireland out of the euro is not a good idea, it would provoke a chain of unwanted effects," Jan Kees de Jager told the RTL 7 television broadcaster. "If you . . . [allowed] southern countries to devalue, then this would hurt our exports and our economy."
Investors in Irish banks will have to take haircuts as part of a restructuring of Ireland's banking system, just like the country itself will have to pay dearly for outside help, he added. "Shareholders and holders of subordinated bonds in Irish banks will have to bleed in a restructuring," he said.
Mr de Jager said Ireland would need to cut spending but had to be careful about raising taxes. "It could be better to raise the VAT rate than the corporate tax rate," he said.
Talks between Ireland and the IMF are moving forward quickly, but it is up to the Government to make the necessary political decisions, the IMF's first deputy managing director, John Lipsky, said today.
"Obviously, our work there is technical, not political. But ultimately decisions have to be made by governments, not by technicians," Mr Lipsky told reporters in New York.