DUBLIN: The incoming Irish government will stick to the fiscal targets laid down in the EU/IMF bailout package, a source familiar with the coalition deal agreed between Ireland's main political parties said on Sunday.
The centre-right Fine Gael party and its junior partner, the centre-left Labour party, have agreed to get the country's budget deficit under an EU limit of 3 percent of Gross Domestic Product (GDP) by 2015, a deadline already agreed with Brussels, the source told Reuters.
In their election manifestos, Fine Gael had targeted a fiscal deadline of 2014 while Labour wanted an extra year, till 2016, to get the shortfall under control.
The source, who declined to be named because the two parties have yet to publish their programme for government, also said Fine Gael's finance spokesman, Michael Noonan, would be the administration's finance minister.
Fine Gael's Enda Kenny, the prime minister in-waiting, is under enormous pressure to persuade European partners to cut the cost of the 85 billion euro ($118.9 billion) bailout package and his coalition deal seems designed to curry favour with the fiscally conservative Germans.
The former primary school teacher, who wrapped up negotiations with the Labour party leader Eamon Gilmore after midnight last night, has secured a deal that will see two thirds of the fiscal adjustment come from cutbacks rather than the 50/50 split between spending cuts and tax increases favoured by Labour.
The two parties have compromised on job cuts in the public sector with some 25,000 positions set to be culled, roughly midway point between the 18,000 targeted by Labour and the 30,000 eyed by Fine Gael.
The new government will not impose any new taxes on work and will look to sell non-strategic state assets, the source said.
The coalition deal will be formally approved by the two parties later on Sunday. The new government will meet for the first time on Wednesday when parliament is recalled.
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