Marching on together: Brian Lenihan and Olli Rehn

What happens once the budget is passed after 7 December in terms of ireland receiving the bailout money?

Once the IMF-led mission completes its work this weekend, the focus switches immediately to 7 December, but not necessarily our own budget day. After 10 days of shuttle talks with politicians and officials here, the so-called country programme agreed between the government and our new creditors – a mix of at least three lending groups – now has to be agreed by the people giving us the bailout cash.

Groups of senior politicians across Europe and, separately, the IMF board in Washington will now need to vote on the terms and conditions agreed between the troika and officials in Dublin over the past 10 days. The 16 finance ministers (including Brian Lenihan) in the euro group have to vote on it. The 27 finance ministers, including the euro 16, will have to vote on it too and, the IMF board in Washington will also take a vote on the terms and conditions agreed in Dublin.

The three paymasters want to be assured they will get their money back. They will be asking whether Ireland can afford to pay the high annual interest rates of at least 5% to service its new multi-billion euro debts.

The next meeting of the 16 euro group members is scheduled for 6 December in Brussels. The next day, on our budget day on 7 December, the 27 finance ministers – Ecofin – are scheduled to meet in Brussels.

It is probable that both sets of meetings involving all 27 finance ministries will make favourable statements after those meetings in Brussels. But it remains unclear whether they will formally vote to back a deal agreed over those two days in early December before the budget has been passed by the Dáil.

It just would not look good for democracy across the EU.

Meetings and votes involving the euro group and the Ecofin do not necessarily have to be taken at face-to-face meetings. Both meetings could formally vote to back the terms and conditions over the phone in subsequent weeks. If the timetable were done quickly, the so-called country programme could be presented at the 6 and 7 December meetings with the ministers declaring their support on condition of the Dáil passing the budget. With the budget being passed in the Dáil, Ireland will then have to sign a so-called Memorandum of Understanding with the EC. In fact, it could be there will be a second Memorandum of Understanding to be signed off between Ireland and the IMF in Washington, reflecting the European-US sourcing of the bailout cash.

Unless the IMF-led mission finds otherwise or demands urgent action to stem a continuing run on the Irish banks' deposits, then there is some room for the Finance Bill to be passed before the end of the year.

There is then the delicate matter that the debt crisis will likely soon engulf Portugal. A Lisbon request for the bailout cash would likely put more pressure on TDs here to support the budget. Last week's comments by EU Monetary Affairs Commissioner Olli Rehn calling on political unity were targeted at the backbenchers of all parties.

What does a Memorandum of Understanding look like?

It will involve detailed lists of reforms, cuts and restructuring. The lenders give deadlines for each. It is like a clipboard of demands with boxes checked only when the targets are met. It is monitored like a report card or a school curriculum project work on a quarterly report.

Who pays what of Ireland's bailout still remains to be hammered out between Europe and the IMF. The idea was always based on the understanding that the IMF – representing the US as its largest subscriber – would contribute half the amount Europe was putting into its big bailout pot. The often-quoted figure of €750bn said to be available for European bailouts comes about because the 16 euro group members have pledged to subscribe up to a maximum of €440bn into Klaus Regling's facility in Luxembourg. Adding in the €60bn contribution pledged by all 27 EU members to the EC brings Europe's total pledged bailout cash to €500bn. With the IMF agreeing to match half of whatever amount Europe pledges, the amount available across all bailout funds comes to €750bn.

It is likely that two thirds of Ireland's cash will come from all of the European pots and one third from the IMF. How much it will tap from Regling's €440bn euro group facility and how much will be sourced from the EC's €60bn fund remains to be seen. A complicating matter is that Ireland may take bi-lateral loans from the three most eurosceptic states across Europe – Britain, Sweden and Denmark. This did not happen by accident and was purposefully agreed since last May to ensure that, in the face of debt stress, Europe would not fracture. British talk of helping neighbours in need disguises the deliberately constructed nature of the eurosceptic alliance designed to show bond markets that Europe would be politically united at times of stress. But whether these 'eurosceptic loans' to Ireland will be counted toward the European pot remains to be seen. It will have to be negotiated between the EC and the euro group how much each contributes to the Irish bailout.

Regling in Luxembourg has said his €440bn facility could raise the money for any Irish bailout within eight days following the signing of the Memorandum between Dublin and Brussels. The memorandum would include the calendar of issuers and the amounts and who pays what between the three and possibly four lending groups. Regardless, the administrative costs faced by the EC and Regling's facility in Luxembourg will be carried by Ireland. The bill for Regling's bonds issued through the German Finance Agency, for the computers of the European Investment Bank and for its staff to monitor the bailout cash, will all be bundled into the annual interest bill facing Ireland. The recipient pays for everything because the donor countries will want to get their money back on their loans. If it is secured lending backed by state assets, the loans could be cheaper. German public opinion, as reflected in its newspapers, appears to be less hostile to Ireland than it was to Greece last May.

In the end, the costs for Ireland of our bailout will be in a similar average range as the 5% annual interest charged on Greece. That is a huge interest bill for any country to meet.

What would happen if we failed to pass a budget on 7 December?

The main reason that the politicians will back the budget is that Ireland is facing an enormous funding problem with the banks. Talk that there is enough money in the exchequer to run the state into next year fails to recognise that the banks here are being kept open with the assistance of vast sums from the ECB and, separately, by the Irish Central Bank on Dame Street. It is why the IMF is here. Deposits continued to flow from the Irish banks in the last three weeks. As fast as the ECB pumps the money in, deposits are flowing out the other side of our banks. Many commentators believe Dame Street is only keeping some banks open by providing funds that the ECB will not provide. It makes our budget problems insignificant in comparison. Few backbenchers of the main governing and opposition parties could fail to ignore any whispered threat that the ECB would slow banking funding.

What happens if the bailout goes ahead but doesn't work and the markets continue to act as though Ireland is an out-of-control basketcase about to default?

Greece is going to default anyway, according to the debt insurance markets. Some economists in London predict Greece will default as early as next year. Ireland is the third most likely state in the world behind Greece and Venezuela, with a 40% probability, to default on its sovereign debts over the coming years. A default by Greece could drag Ireland and Portugal out of the euro. The scale of our banking debts may even mean that Ireland defaults first on its sovereign debts. Bailouts are designed to buy time. They are not the solution to the euro's debt crisis.