Cowen denies bid for European rescue package

“We’ve made no application whatsoever for funding,” he said.

Amid fears the Government was trying to ease runaway interest rates on global money markets, the Taoiseach said there were issues for the euro that Ireland was working with EU partners on.

“We are part of a wider currency area and there are issues for the euro currency... we are co-operating with our colleagues on those issues,” he said.

Mr Cowen said he would work with European partners in coming weeks and months to make sure the euro remains stable.

Earlier, five European Union finance ministers – George Osborne of the UK, Christine Lagarde of France, Wolfgang Schauble of Germany, Italy’s Giulio Tremonti and Spain’s Elena Salgado – broke off from the G20 summit in Seoul for talks on Ireland’s economic crisis.

In an unusual move Mr Osborne united with eurozone counterparts and put to one side the tradition of allowing them to manage issues within the single currency region.

The Chancellor said: “We should support the Irish Government in the steps that it is taking.”

In a joint statement the five finance ministers insisted banks and investors lending to Ireland would not face losses on loans, adding: “Any new (bailout) mechanism would only come into effect after mid-2013 with no impact whatsoever on the current arrangements.”

Newswire Reuters said eurozone sources have confirmed negotiations between Ireland and EU officials on tapping into the financial stability fund set up in the wake of the Greek economic crisis.

But Mr Cowen said there was no immediate need for a bailout, insisting Ireland was funded up to the middle of July next year.

“We have funding up to mid-year... we don’t have to borrow any money in respect of the sovereign debt, the sovereign issues that affect the Government and running of the country,” he said.

Mr Cowen, on a whistlestop campaign trail for the Donegal South-West by-election, added that there were options “domestically and nationally” available to Ireland after that.

Brian Lenihan, Finance Minister, claimed the soaring interest rate for Irish state borrowing was not because of the actions of his Government.

And he said the markets feared “further black holes in the Irish banking system”.

“This is not Ireland’s fault, or the Government’s fault. This is part of a wider international problem and can only be dealt with as part of an international problem,” the minister said.

He added: “It comes back to the fundamental point which I have reiterated in the last two years – if you want to tell your bank manager that you don’t want to pay that has very, very dramatic consequences.

“We would have a real crisis if we decide that should be our policy.”

The statement by the ministers was being seen as clarification that private investors will not be saddled with losses on Irish bonds for the next three years.

Ireland‘s European Commissioner Maire Geoghegan-Quinn, on a visit to Belfast, said the ministers’ statement was a show of solidarity.

“I think they want to help and they are basically putting out that public statement to say we‘re here, we want to help,” she said.

Dublin’s affairs were said to be a hot topic at the G20 in Seoul after a week of market jitters about a possible debt default pushed yields on Irish 10-year bonds up beyond 9%.

The subsequent statement by the ministers appeared to have the desired effect with interest rates coming down to the 8.5% mark.

Ireland is now facing a delicate three weeks as the Government puts together a drastic €6bn slash-and-burn budget.

Taxes look set to increase by €1.5bn while Government departments and state agencies will have to live with €4.5bn spending cuts.