Irish PM set to deliver austerity budget

(DUBLIN) - Ireland's Prime Minister Enda Kenny was Monday to announce a 3.8 billion euro austerity budget, a day after warning citizens to brace for years of economic hardship during an historic television address.

"This budget will be tough -- it has to be," Kenny said in his ten-minute prime-time address.

He also revealed the state was spending 16 billion euros ($21.4 billion) a year more than was being taken in.

Kenny said he was making the rare "state of the nation" address in advance of the 3.8 billion euro budget to tell people directly about the challenges the country faces.

"I know this is an exceptional event, but we live in exceptional times and we face an exceptional challenge," he warned.

"At the end of last year our economy was in deep crisis and... we remain in crisis today," he added.

"I would love to tell you tonight that our economic problems are solved and that the worst is over but for far too many of you that is simply not the truth.

"We must cut public spending by 2.2 billion euros and raise 1.6 billion euros in extra taxes," he explained.

The prime minister vowed to bring about reform "so that we never return to the practices that drove our economy into freefall."

Ireland has had four austerity budgets in just over three years after its Celtic Tiger economic boom turned to bust when a property bubble collapsed and triggered a banking crisis.

Massive debt and deficit problems led to an 85-billion-euro ($115-billion) EU-IMF rescue package in November 2010.

Kenny's government is struggling to meet targets set by the EU, IMF and ECB as part of its bailout deal and plans to bring its deficit down to 8.6 percent of GDP next year and to less than three percent, the EU ceiling, by 2015.

In a departure from precedent the details of Budget 2012 will be delivered to the Dail (parliament) over two days instead of one.