00:25 15Dec10 RTRS-Irish parliament to vote on EU/IMF bailout
* Vote expected to pass with slim majority
* Parliamentary approval will clear the way for IMF vote
* Govt has said it will tap funds early next year
* Opposition hopes to renegotiate terms of deal
By Yara Bayoumy
DUBLIN, Dec 15 (Reuters) - Ireland's parliament will vote on a controversial multi-billion euro EU/IMF bailout loan on Wednesday, putting pressure on opposition parties critical of the aid package ahead of a general election early next year.
Prime Minister Brian Cowen is expected to get the 85 billion euro rescue package through the lower chamber but his politically charged decision to seek parliamentary approval has delayed IMF board approval for its portion of the funds.
The support of two independent MPs will ensure the package's passage in the face of Cowen's shaky majority and the bailout's rejection by the centre-right Fine Gael and centre-left Labour opposition parties.
Both parties have criticised Cowen for seeking external funds, saying the deal was a humiliating loss of sovereignty.
They have said they will renegotiate the package when they come to power, as is expected after an election in February or March, but the reality is that they will have to work within its targets or risk losing funding.
Fine Gael has said it would try to get a lower interest rate but Alan McQuaid of Bloxham Stockbrokers doubted that would work, especially as the rate charged is based on market prices.
Ireland's debt management agency has said the average interest rate on the rescue funds is 5.82 percent.
"The politicians may change, but the financial situation won't," McQuaid, Bloxham's chief economist, said. "I don't think there will be much room for manoeuvre. They may think they can (change) but the reality is much different."
DONE DEAL
The bailout is designed to end a two-year banking crisis that has brought the economy to its knees and sent shock waves through the euro zone.
In return for 50 billion euros in sovereign funding and 35 billion euros in capital top-ups for its banks, Ireland has promised to shrink and radically restructure its lenders and tackle the worst deficit in Europe by 2015 at the latest.
Dublin will squeeze 15 billion euros -- equivalent to around 10 percent of annual economic output -- from its deficit over four years starting with the 2011 budget's record package of 6 billion euros in spending cuts and tax rises.
Some economists have warned that such aggressive austerity measures will tip the domestic economy into a prolonged downturn, jeopardising its ability to meet its deficit targets and deal with its debt crisis.
In an attempt to bring order to the banks, a new law due to be debated by parliament on Wednesday will give the government extensive power to restructure the sector, including the power to impose losses on subordinated bondholders. [nLDE6BD1LA]
There will be a two-hour debate on the bailout package before a vote at around 1330 GMT, and parliament's vote in favour will enable the IMF to approve its 22.5 billion euro portion of the bailout on Thursday.
Finance Minister Brian Lenihan has said he expects to start accessing external funding early next year.
"The bailout gives us an opportunity to get our house in order. We'd have preferred if we'd done proper restructuring on the banks but that didn't happen," Brian Devine, Chief Economist at NCB Stockbrokers, said.
"We don't have a choice," he said, referring to the severe budget. "We couldn't fund ourselves in the market. It's a done deal." (Editing by Carmel Crimmins and Tim Pearce) ((yara.bayoumy@reuters.com; +353 1 500 1504;
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