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Irish Budget Under Threat as Lawmakers Withhold Support

Irish independent lawmaker Mattie McGrath said he is “not too sure” that he’ll back the Finance Bill, raising concern that the budget may not pass.

Prime Minister Brian Cowen’s minority government faces defeat on a vote on the bill today at noon, if McGrath, Michael Lowry and Jackie Healy-Rae, three independent lawmakers, join opposition parties in opposing the bill. Lowry and Healy Rae said yesterday their support isn’t guaranteed.

The bill is being pushed through parliament with “indecent haste,” McGrath said in an interview with Dublin-based broadcaster RTE today. He said he’ll hold more talks with Finance Minister Brian Lenihan on the bill, which makes permanent the measures introduced in December’s budget.

Passing the budget is a condition of Ireland’s 85 billion-euro ($117 billion) aid package from the International Monetary Fund and the European Union. Cowen’s government may be forced to call an immediate election if it loses today’s vote on the bill. Green Party lawmaker Eamon Ryan said in an interview with RTE that he expects “common sense to prevail” and the bill to pass.

“While we cannot rule out that the Bill does not pass, which would trigger an immediate election, we would expect that either the independents will agree to support the bill, or a situation arises where either some or all Fine Gael members of parliament choose to abstain,” Glas Securities, the Dublin-based fixed income firm said, in a note to clients.

The extra yield investors demand to hold Irish 10-year bonds rather than German securities of similar maturity widened 10 basis points to 580 points. That is still lower than a euro-era record of 680 points on Nov. 30, two days after Ireland accepted the bailout.

The government and opposition agreed to accelerate the vote on the bill before national elections are called. Lenihan said yesterday legal difficulties and the faster timetable meant he had to drop a plan to include a special tax on bankers’ bonuses in the bill. The independent lawmakers want the levy reintroduced and proposed changes to the tax collection system dropped.

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