The International Monetary Fund has said that Ireland is implementing the programme agreed with the agency and EU partners well and will meet all the objectives identified in the agreement between the parties.

Overall the IMF says Ireland is on track to meet all the targets agreed under the programme negotiated last year.

They are disbursing around €1.5bn in loans as part of that.

The IMF says Ireland's economic growth rate will not be as high as they thought over the next two years. They expect the economy to grow by 0.4% this year and by only 1.5% next year.

However the agency said the costs of this will be more than offset by the benefits of the European Council decision in July to significantly cut the interest rate Ireland pays on its borrowings from the EU and partner countries.

The Fund noted the notional cost of Irish borrowings continued to fall on international markets but it also said there were increased risks that have come about because of the wider crisis in the eurozone in the last two months.

Mortgage debt

The IMF says it supports a case-by-case approach to the issue of mortgage debt reduction.

In a conference call this afternoon, the IMF mission chief for Ireland, Craig Beaumont said the Fund supports the approach taken by the Government and the Central Bank of encouraging lenders and borrowers to work out individual deals.

It said it welcomed the code of conduct for mortgage lenders developed by the Central Bank.

The IMF said it was awaiting legislation on a new personal insolvency regime and out of court debt settlement and enforcement mechanism, which is expected by the end of March.

Mr Beaumont said the Fund was satisfied the Irish banks were now in a sufficiently strong position to take a case-by-case approach to dealing with heavily indebted borrowers along these lines.