Basically, Ireland's economy has increased rapidly during the last three years, and its economic growth has mainly depended on its property market.
Since 2008, the property market began falling apart with house values dropping by 50-60%, and lots of bad debts going around the market.
So the bad debts have almost damaged the country's banks, forcing the government to bail them out which have wrecked Ireland's finance.
Despite the substantial cost of bailing out the banks, the country's finance has also been severely affected by a sharp deterioration in tax revenues and a rise in unemployment benefit claims.
On top of that, the government will need to spend huge sums of money, worth 12% of its GDP.
As a result, Ireland has agreed to accept the EU's 85bn Euro rescue package with a hope of tackling its huge finance hole.
In addition to that, the government has also drawn up an austerity programme for spending cuts and tax rises as part of the rescue package.
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