Brian Lenihan said that the country was running a deficit of 19 billion euros which it could not afford to finance at current market rates and was going to the European Union and International Monetary Fund to ask for help.
Lenihan also confirmed that officials were seeking a mammoth contingency fund to provide "firepower" to back the country's debt-ridden banks. In an interview with RTE radio, he refused to be drawn on the size of the fund, although he said the figure would not reach100 billion euros.
Lenihan's statement came as the government gathered to finish a four-year plan for slashing euro15 billion ($20.5 billion) from its annual deficits, an unprecedented austerity push designed to keep the country from bankruptcy.
The office of Prime Minister Brian Cowen said the 15-member Cabinet would put the finishing touches on the austerity plan. It has been in the works since September, runs to 160 pages and is expected to be publicly unveiled Tuesday.
The government says the still-confidential plan has been endorsed by dozens of experts from the International Monetary Fund, European Commission and European Central Bank, who descended Thursday on Dublin to begin poring over the accounts of the government, treasury and banks.
Speaking before Sunday's meeting, Cowen stressed that Ireland would not raise its 12.5 percent rate of tax on business profits, its most powerful lure for attracting and keeping 600 U.S. companies based here. France, Germany and other eurozone members have repeatedly criticized the rate as unfair and say it should be raised now given the depth of Ireland's red ink.
Cowen said he wouldn't be budged by such arguments, calling the 12.5 percent rate — less than half the eurozone average — "a cornerstone of our industrial strategy."
Eurozone governments launched the IMF-EU mission after the European Central Bank — the ultimate arbiter of the 16-nation euro currency area — expressed private misgivings about the flight of corporate deposits from Ireland's banks since the summer.
In recent weeks Dublin banks have reported losing 10 percent to 17 percent of their deposits, and the Frankfurt-based ECB had to fill the gap with its own loans totaling a reported euro130 billion, one quarter of the central bank's entire loan book.
