Source: The Associated Press

EU governments on Sunday approved an 85 billion euros (US$113 billion) bailout deal for Ireland to help the debt-struck nation withstand the weight of its banking crisis.

According to a statement released by the Irish government, the country will take 10 billion euros immediately to boost the capital reserves of its banks. Another 25 billion euros earmarked for the banks will remain in reserve.

The Irish government’s public finances will receive 50 billion euros, to be drawn upon as necessary.

“It provides Ireland with vital time and space to successfully and conclusively address the unprecedented problems that we’ve been dealing with since this global economic crisis began,” said Irish Prime Minister Brian Cowen at a press conference in Dublin.

The statement said the International Monetary Fund, the 16 eurozone nations and the European Commission will be involved. Britain, Sweden and Denmark will offer bilateral loans.

The statement says the average interest rate Ireland will is 5.8%. This total reflects higher rates to be charged by EU sources, and lower rates from IMF and national donors.

Greece is paying 5.2% interest on its own bailout from May. Ireland’s aid package includes loans that range from 3 to 7 1/2 years, longer than the Greeks’ three-year deal.

The European Commission also granted Ireland an extra year to bring down its deficit to within the EU limit of 3% of GDP. It will now have until 2015, compared with 2014 previously.

Associated Press Writer Robert Wielaard in Brussels contributed to this report.