EU agrees on 67.5 billion euro bailout loan for Ireland

European Union nations agreed to give euro67.5 billion ($89.4 billion) in bailout loans to Ireland on Sunday to help it weather the cost of its massive banking crisis, and sketched out new rules for future emergencies in an effort to restore faith in the euro currency, The Associated Press reported.

The rescue deal, approved by finance ministers at an emergency meeting in Brussels, means two of the eurozone's 16 nations have now come to depend on foreign help and underscores Europe's struggle to contain its spreading debt crisis. The fear is that with Greece and now Ireland shored up, speculative traders will target the bloc's other weak fiscal links, particularly Portugal.

In Dublin, Irish Prime Minister Brian Cowen said his country will take euro10 billion ($13.24 billion) immediately to boost the capital reserves of its state-backed banks, whose bad loans were picked up by the Irish government but have become too much to handle. Another euro25 billion ($33.1 billion) will remain in reserve, earmarked for the banks.

The rest of the loans will be used to cover Ireland's deficits for the coming four years. EU chiefs also gave Ireland an extra year, until 2015, to reduce its annual deficits to 3 percent of GDP, the eurozone limit. The deficit now stands at a modern European record of 32 percent because of the runaway costs of its bank-bailout program.