The Irish Finance Minister, Brian Lenihan is set to announce an emergency budget on Tuesday. Lenihan is expected to raise taxes and reduce spending in his budget.

In its latest Quarterly Bulletin, the central bank said government expenditure increased at an average rate of around 11% a year for the past three years. According to Finance Ministry, the budget deficit surged to EUR 3.7 billion in the first quarter.

In March, the Fitch Ratings said it may reduce Ireland's 'AAA' long-term foreign currency issuer default rating to negative, reflecting sharp declines in tax receipts across the board in January and February.

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