FACTBOX-Ireland's new programme for government

DUBLIN, March 6 (Reuters) - Ireland's new government published its programme for government on Sunday, setting out its aim to stick to the budget targets laid down in an 85 billion euro ($118.9 billion) EU/IMF rescue package.

Here are some of the highlights of the programme agreed to by the centre-right Fine Gael party and centre-left Labour:

EU/IMF DEAL

The programme reiterates the incoming government's plans to seek a reduced interest rate on Ireland's EU/IMF loans and a more affordable solution to the banking crisis, adding that the rescue package had failed to restore confidence in the economy and contributed to wider euro-zone instability.

It states that the incoming government recognizes that there is a growing danger of the state's debt burden becoming unsustainable and that measures to safeguard debt sustainability must be urgently explored.

FISCAL MEASURES

The new government will aim to shrink Ireland's budget deficit from nearly 12 percent of Gross Domestic Product (GDP) currently to below an EU limit of 3 percent by 2015, a deadline already agreed upon with the European Commission.

It will stick to the aggregate adjustment set out in the first two years of the previous administration's four-year fiscal plan, meaning it will still aim to find some 3 billion euros worth of savings in the budget for 2012. It will not, however, decrease social welfare rates to do so.

The plan reiterates the incoming and outgoing government's pledge to keep Ireland's corporate tax rate at 12.5 percent.

The new government will reduce the number of public sector employees by close to 10 percent, cutting between 18,000 and 21,000 by 2014, and an additional 4,000 by 2015.

It plans to reverse the 1 euro cut in the minimum wage imposed by the previous administration, cut Ireland's lower rate of VAT to 12 percent from 13.5 percent for two years, limit the top rate of VAT to 23 percent and will consider various options on a property tax.

It will also target up to 2 billion euros in sales of non-strategic state assets, drawing from the recommendations due to be published by a government-appointed review.

BANKS

The programme also reiterates that the incoming government will defer further recapitalizations of local banks -- postponed by the previous administration until after the election -- until the end-March solvency stress tests are complete.

The incoming government remains committed to downsizing the banking sector to reduce reliance on Irish Central Bank and European Central Bank (ECB) funding, but says bank deleveraging must be paced to match the return of more normal market conditions and demand for bank assets.

It will also end further asset transfers to the National Asset Management Agency (NAMA), Ireland's so-called "bad bank" and restructure bank boards, replacing directors who presided over failed lending practices.

The new government plans to introduce a comprehensive special resolution regime for dealing with bank insolvencies and accepts that legislation may be necessary to extend the scope to include unsecured, unguaranteed senior bonds.

POLITICAL REFORM

There will be a new cabinet position to deal with public spending and public sector reform and the holder of this office, along with the finance minister and a minister from each of the two parties, will sit on an newly formed economic council.

The new government will hold a referendum asking voters to abolish Ireland's second chamber, will reduce the number of MPs in the lower house once this year's census is published and increase by 50 percent the number of days lawmakers sit. ($1=.7148 Euro) (Reporting by Padraic Halpin, editing by Maureen Bavdek)