IMF warns against extra budget measures until 2015 to protect growth

Tuesday 18 December 2012 12.02
IMF authorises release of a further €890m in funding
IMF authorises release of a further €890m in funding

The IMF has said that if Ireland misses its economic targets next year due to weaker than expected growth, the Government should not introduce any extra budget measures until 2015 to protect economic recovery.

The International Monetary Fund has approved the eighth review of Ireland's financing programme, and authorised the release of a further €890m in funding.

This latest release of funds means Ireland will have drawn down just over €19 billion of the €22 billion of IMF loans available under the bailout programme.

Although the IMF said that Ireland has hit all the targets in the two year old programme, it warns that this could be harder next year as economic growth will be lower than the Government forecast.

It said that if growth is even weaker than forecast, and economic targets begin to slip, the Government should not introduce a mini budget or other measures to get back on track. Instead it should wait until 2015 before taking extra consolidation measures, in order to protect whatever growth there is.

In what may be a reference to the promissory note arrangement, the IMF's deputy managing director David Lipton called on Ireland's European partners to forcefully deliver on pledges to improve Ireland's programme sustainability.

Mr Lipton said supporting medium term growth and debt reduction prospects would help to get Ireland out of official funding programmes and back to market funding quicker.