The European Commission has published its latest assessment of the Irish economy following its October review of Ireland's implementation of the EU/IMF programme.
The Commission said Ireland's budgetary performance had been on target so far, and it welcomed last week's Budget.
But it lowered its growth forecast for next year from a previous 1.9% to 1%, saying the near-term economic and budgetary outlook had worsened due to weaker activity in the world economy and higher than expected unemployment.
The GDP growth forecast for this year, however, was raised from 0.6% to 1.1%.
The Commission said the money provided under the bail-out deal was expected to cover Ireland's funding needs until the second half of 2013, due to the lower than expected cost of recapitalising the banks.
It said the Government should consider issuing some short-term debt soon, as a first step to re-entering the bond market.
On asset sales, the report said a more "substantive" discussion of the Government's plans was expected at the next review in January.
The report paves the way for the third instalment of €4.2 billion in European funding to Ireland in January.
Vote would be about euro - Noonan
Finance Minister Michael Noonan has said any referendum on the new EU agreement on stronger budgetary rules may effectively be a vote on Ireland's continued euro membership.
The Government will start assessing whether it needs to hold a vote after it receives a first draft of the text by the end of the year, Mr Noonan said in an interview on Bloomberg Television today.
"It really comes down on this occasion to a very simple issue; do you want to continue in the euro or not," the minister said. "Faced with that question, I think the Irish people will pass such a referendum."
Minister Noonan also told Bloomberg the imposition of a financial transaction tax would be a matter of concern for Ireland if it were to be applied to the financial services sector in Dublin and not in London.
But Mr Noonan said that he did not think the use of the British veto in Brussels last week would have any immediate impact on Ireland's financial services sector, which employs over 30,000 people. He added, however, that the Government would continue to watch the situation very carefully.
Mr Noonan said that the Government had a better idea of the UK's position now following last night's telephone conversation between the Taoiseach and David Cameron.
He said there was an urgency to draft the policy objective outlined in Brussels last week and that the Government was confident the UK would not inhibit that in any way.
Mr Noonan said people would not be able to judge whether a referendum was required in Ireland until they saw the text.
The Minister also said he hoped Ireland would make a full return to the bond markets by mid-2013.
He also said he was confident about the future of the euro and forecast that Ireland's economic recovery would strengthen after gradual progress next year.
He said he expected Ireland's debt level to fall after peaking at 119% of gross domestic product in 2013.
Mr Noonan added that jointly issued euro bonds were not an immediate possibility but could be introduced in the future to help solve the euro zone debt crisis.
