DUBLIN (Reuters) - Ireland on Wednesday raised its 2009 debt issuance target and warned that without further fiscal tightening the budget deficit could exceed 10 percent of national income for the next five years.
Prime Minister Brian Cowen is under pressure to bring the deficit in line with European Union rules prescribing a fiscal gap of no more than 3 percent of gross domestic product, but he also faces rising popular anger at home at his reform measures.
Hundreds of police officers protested on Wednesday against a levy on public sector pensions which makes up the bulk of 2 billion euros (1.8 billion pounds) in fiscal cuts. Even after those cuts the deficit is seen at 9.5 percent of GDP this year.
Earlier this month the European Union started disciplinary procedures against Ireland for exceeding the bloc's deficit ceiling of three percent but the EU said it was not keen on implementing any sanctions against the country during the recession.
"In the absence of further appropriate measures, we face the prospect of a General Government Deficit over 10 percent of national income for each of the next 5 years," Cowen said according to the text of his speech at a business forum.
He did not specify whether he meant gross domestic or national product.
"There is simply no basis whatsoever on which this could be considered sustainable," he said, adding that further measures to raise tax revenue and cut spending measures would be needed.
As Ireland faces its worst recession on record this year after the bursting of its property bubble, Cowen said the weakness of the construction sector would lead to "short-term job losses of over 100,000 from new house building alone."
Earlier on Wednesday, the National Treasury Management Agency said Ireland aimed to issue 25 billion euros ($31.9 billion) in debt in 2009, more than the 23 billion forecast earlier this month.
The NTMA said demand for its new 3-year bond had reached 5.2 billion euros, of which it satisfied 4 billion to keep yields low.
"The NTMA ... were very pleased to have secured at this very early stage in the year, through this bond issue and the 6 billion euro bond issued in January, 40 percent of the total expected funding requirement of 25 billion euro for 2009," it said in a statement.
(Reporting by Andras Gergely; Editing by Diane Craft)
