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Ireland’s Finance Minister Brian Lenihan said the country doesn’t need any bailout from the European Union and that he will continue to cut spending to control a ballooning deficit.

“We don’t need any bailout here,” Lenihan said in a interview with Bloomberg Television from Dublin today. “There are good elements” in this economy, “but we’ve had a crisis in the public finances.”

Ireland’s budget deficit is set to soar to 10.8 percent of gross domestic product this year, more than three times the European Union limit, even after the government announced a plan to cut spending and increase taxes. The economy will shrink by 8 percent in 2009 and tax receipts may drop 16 percent, according to finance ministry forecasts.

“We had to introduce some emergency taxation measures to shore up our revenue base,” Lenihan said. “But where the real heavy lifting has to take place is on expenditure. We’ll keep doing that.”

The government also said it will buy as much as 90 billion euros ($119 billion) of real-estate loans from the country’s biggest lenders in an effort to salvage the banking system.

The government will pay an “economic price for these assets which ensures that both the developers and the banks take a significant loss where they were originally purchased at very inflated prices,” Prime Minister Brian Cowen told parliament in Dublin today faxless payday loan guaranteed.

Debt Rises

Assuming the toxic loans will result in a “very significant increase in gross national debt,” Lenihan said in his emergency budget yesterday. The increase will be offset by the sale of some assets transferred to the government.

The difference in yield, or spread, between Irish and German 10-year notes widened to 215 basis points today from 204 yesterday. The spread widened from 40 basis points a year ago as investors demanded higher premiums to lend to smaller European economies amid the global financial turmoil.

Credit-default swaps on Irish government debt rose to 237 basis points today from 225 yesterday, according to CMA Datavision. They reached a record 393 basis points on Feb. 17.

“The bond markets are paying more attention to the bad loan rescue package,” said Padhraic Garvey, head of investment- grade debt strategy at ING Group in Amsterdam. The loans are the “worst stuff” on the banks’ books and “this is effectively going to be taken over by the Irish government.”

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