The European Commission has given a generally favourable analysis of the Irish economy, pointing to a possible growth level of 5% by 2005-2006.
In its annual assessment, the Commission said the general Government debt stood at around 33% of GDP, the second lowest level in the EU.
The government deficit in 2003 is expected to be 0.1% of GDP, 0.6% better than the target set in the previous update.
This was due to a tax overshoot and savings on expenditure, especially on public investment and interest payments, although the deficit is expected to rise again to 1.2% on average between 2004 and 2006, the Commission reports.
This morning's report is part of the annual monitoring of the finances of eurozone members under the Growth and Stability Pact.
The Commission said that increases in Ireland's budget deficit over the coming two years are partly because the Government puts money aside for ‘unforeseen circumstances’ and because of an increasing investment under the National Development Plan.
The Government's structural reform programme focuses on safeguarding a low tax burden and improving public services and infrastructure, the report continues.
The update also presents further measures to improve the control and management of public expenditure such as the extension of multi-annual budgeting to all capital spending.
These measures were in line with the recommendations in the Broad Economic Policy Guidelines 2003-2005.
