Dublin - In the first budget since Ireland's economic crash, Finance Minister Brian Lenihan is set to announce Tuesday 2 billion euros (2.7 billion dollars) in cuts aimed at tackling the "most difficult conditions in living memory."

Disappearance of state agencies, tax increases, child benefit cuts and increases in hospital charges are just some of the scares in store in a budget being compared to early Halloween in Ireland.

In the light of the worst pre-budget figures released since the 1980s, the finance minister is faced with an 11.5-billion-euro exchequer deficit in 2009.

On the eve of the budget, Lenihan said its aim was to stabilize the public finances in the face of deepening recession, boost "economic confidence and send out a strong message that Ireland was still a good place to do business."

The finance minister said the government had looked at every facet of spending and had agreed to implement cuts equivalent to 1 per cent of gross domestic product (GDP) or almost 2 billion euros.

In the most stringent budget since the 1980s, the cuts would not be confined to the public sector pay bill but would also affect consultancies, advertising and schemes run in all departments.

The only department to escape cuts would be the department of social welfare, where provisions had to be made for higher numbers of unemployed people and increases in social welfare payments, according to the finance minister.

However, a childcare supplement of 1,000 euros for children under six, introduced in the boom years of the Celtic Tiger, which began in the mid-1990s and continued for over a decade, is likely to be scrapped.

Lenihan said it was essential for the government to protect the most vulnerable in society, but he also emphasized that it was essential that social benefits were targeted at those who needed them most.

Tax increases may come in the form of a levy, set at one or two per cent depending on earnings, which would be more lucrative than increasing tax bands and could be passed off as temporary.

The high rate of tax relief on pensions may also be axed or cut. Another boom-time benefit likely to go is automatic entitlement to medical cards for the over 70s, ensuring free medical treatment regardless of income.

Almost certain to be introduced, and deeply contentious amongst the middle-classes, is the doubling of registration fees for those in third-level universities and colleges.

In addition the finance minister is expected to scale back on net capital spending on infrastructure by 9 per cent or 760 million euros, according to Irish media reports.

It is thought that cutbacks in infrastructure will be kept at this level in order to avoid further choking the construction industry, which dramatic downturn has been to a large extent responsible for Ireland's economic freefall. (dpa)