By Jodie Ginsberg
DUBLIN (Reuters) - Ireland will seek a bailout from international lenders, the Irish finance minister said on Sunday, ending weeks of speculation that the country needs aid.
"I will be recommending to the government that we should apply for a program and open formal negotiations," Brian Lenihan told public broadcaster RTE. He said a plan to restructure Ireland's banks was likely to be a key feature.
However, changes to Ireland's corporation tax were off the agenda and would inhibit the economy's ability to grow, he said.
The amount Ireland plans to apply for would not be a "three figure sum," Lenihan said, knocking down a report on Sunday that suggested Ireland would need as much as 120 billion euros.
Sources have told Reuters that Ireland may need 45-90 billion euros ($63-$126 billion), depending on whether it needs help only for its banks or for public debt too.
Officials from the International Monetary Fund (IMF) and European Commission have been in Dublin since Thursday to thrash out a deal to help with Ireland's banks. Concerns over the banks' huge liabilities have sent Irish borrowing costs soaring.
As well as the four-year plan, the government will put forward a program for saving the country's banks that will involve restructuring their balance sheets.
"The banks are well funded as part of the Eurosystem but they can't remain in that state forever," Lenihan said.
"There have to be structural changes in the banks that put them back on the road," he said.
Ireland's banking sector, brought to the brink of collapse by exposure to a property and construction sector that slumped after the global financial crisis, has grown dependent on ECB funds and seen an exodus of deposits over the past six months.
CRISIS ON ALL FRONTS
Calls are mounting for the government to stand down over its handling of the economic and financial crisis, but Lenihan said the Ireland should not be plunged into a general election.
Politicians from within ruling Fianna Fail's own ranks criticized the government on Sunday, while commentators highlighted public anger that unions have warned could spill into civil unrest.
"You have lied, you have let us down. For Ireland's sake, go now," demanded the Sunday Independent newspaper under a front page picture of the cabinet.
Public sentiment has reached boiling point in the past week over the way the government presented its discussions with EU and IMF officials over a possible bailout. The government insisted publicly it was not in talks when informal discussions were in fact taking place.
"...the government's actions and comments over the past 10 days have fundamentally undermined public trust," Fianna Fail politician and former defense minister Willie O'Dea wrote in the Sunday Independent.
Other colleagues went further.
"Fianna Fail as a party must change, and it must call an election -- even if it means that we will lose power," Fianna Fail lawmaker John McGuinness wrote in The Irish Mail on Sunday. "(Prime Minister) Brian Cowen must stand down."
Cowen, finance minister at the end of Ireland's boom years, will meet with cabinet colleagues later on Sunday to finalize plans for austerity measures aimed at saving 15 billion euros for the state by 2014.
Local media said on Sunday that the package, expected to be published early next week, will include a new property tax and cuts to the minimum wage, to child benefits and to job seekers' allowances. Tax breaks for higher earners may also stop.
Support for centrist Fianna Fail has dropped to a record low of 17 percent, a Sunday Business Post/Red C poll on Sunday showed. That percentage at a general election would cost the party half of its seats.
A spring election is seen as likely even if the government manages to pass the first of its austerity budgets next month given Fianna Fail's razor-thin parliamentary majority, which is expected to be cut further following a by-election on Thursday.
A coalition of center-right Fine Gael and center-left Labour is considered the likely successor, although they would be unlikely to deviate far from the austerity program, particularly if it is linked to the aid package.
Unions say any further measures may prove a tipping point.
"The talk now is of the budget, and effectively destroying the social welfare system. I think there is going to be huge civil unrest as a result of that," TEEU union leader Eamon Devoy told Reuters.
(Editing by Louise Ireland)
