European Union finance ministers on Sunday welcomed Ireland's request for financial assistance from the EU and eurozone member states, saying "providing assistance to Ireland is warranted to safeguard financial stability in the EU and in the euro area."

According to the ministers, the financial assistance package to the Irish state should be financed from the European financial stabilization mechanism (EFSM) and the European financial stability facility (EFSF), possibly supplemented by bilateral loans to be negotiated by EU member states.

Britain and Sweden indicated on Sunday that they stand ready to consider a bilateral loan.

The support will be provided under a "strong policy program" which will be negotiated with the Irish authorities by the European Commission and the International Monetary Fund (IMF), in liaison with the European Central Bank (ECB), a statement said.

"The program will address the fiscal challenges of the Irish economy in a decisive manner," the statement said.

"It will build on the fiscal adjustment and structural reforms that will be put forward by the Irish authorities in their Four- Year Budgetary Strategy next week," it added.

The Irish Government earlier estimated that the total cost of rescuing Ireland's banking sector may run as high as 50 billion euros (about $68 billion), which will push the country 's budget deficit in 2010 to 32 percent of gross domestic product (GDP) from the previously estimated 11 percent.

Dublin is expected to unveil a four-year budget cutting plan next week, aiming to achieve fiscal consolidation of 6 billion euros ($8.21 billion) in 2011 as part of a strategy leading to a three-percent-of-GDP deficit by 2014.

The EU finance ministers said the aid program to Ireland will also include a fund for potential future capital needs of the Irish banking sector.

"By building on the measures already taken by Ireland to address stress in its banking sector, a comprehensive range of measures -- including deleveraging and restructuring of the banking sector -- will contribute to ensuring that the banking system performs its role in the functioning of the economy," the statement said.

After approval by the Irish Government, the program will be endorsed by the EU finance ministers and the Eurogroup, in line with national procedures, on the basis of a Commission and ECB assessment.

Irish Prime Minister Brian Cowen said on Sunday that Ireland has formally made a request for financial assistance from the EU and the IMF, but the terms of the funding being sought would be the subject of negotiations.

A joint mission of the EU, the IMF and the ECB is currently in Dublin, to find out the real state of the Irish banking sector.

Cowen said that the bailout funds would be used to put the Irish banking system back "on its own two feet," and to address the budget deficit. As to the country's low corporation tax rate, Cowen said it would not be changed as part of the deal.

The Irish Government had been reluctant to seek aid from the EU and the IMF until last week's meeting of EU finance ministers. Dublin had insisted that its government was well-funded until the middle of next year, but admitted that there were serious problems with its banking sector.

For fear of contagion of the Irish crisis, several eurozone member states have reportedly pushed Dublin to tap the European financial stabilization mechanism.

(Xinhua News Agency November 21, 2010)