The Central Bank has issued a warning that risks of further falls in property prices, weaker growth and possible capital shortfalls in state-owned banks continue to threaten Ireland's debt sustainability.
Ireland is hoping to return to bond markets in the next 12 months to build up enough funds to exit a three-year EU/IMF bailout programme.
In a staff paper reviewing the state of Ireland's financial sector, the Central Bank writes that markets still believe Irish debt levels are incompatible with access to long-term funding.
It says sovereign debt sustainability is vulnerable to further unexpected increases in debt levels or reductions in economic growth and warns throughout its report of the risks across the economy of further property price declines.
The Central Bank says, however, that any actions that would help to manage bank debt taken on by the State would improve financial markets' perception of Ireland's creditworthiness.
That is understood to be a reference to the ongoing issue of the Anglo Irish Bank promissory notes.
The report points to risks from continued economic weakness and over-indebted private and public sectors.
It has warned that mortgage stress, poor profit outlooks and funding pressures could see the fresh capital put into the country's banks erode more quickly than expected.
