The International Monetary Fund has called for greater European support to help the Irish economy to recover.
In a report on Ireland issued as part of its latest review of the EU/IMF programme, the fund says further support for Ireland would increase the plan's chance of success and benefit overall European stability.
The IMF says Europe should look at all the options available to help Ireland. It says a range of measures could be considered, including medium-term funding for Irish banks from the ECB and temporary equity participation in banks by European partners. The IMF adds that Ireland's debt position would be improved by changing the terms on which money used to recapitalise banks was borrowed.
The report says Ireland has met the main budgetary and banking targets under the bail-out deal, but risks to the economy's performance from the euro zone debt crisis have escalated, while international growth prospects have also weakened.
The IMF expects the Irish economy to grow by 1.1% this year, but has lowered its forecast for next year to 1%, down from 1.9% after its last review. The main reason is that Irish export growth is expected to slow because of weaker economic conditions in the US and UK.
The 2012 forecast is the same as that of the European Commission in its recent report. Both are slightly more pessimistic than the Government current forecast of 1.3%.
The IMF also warns that the unemployment rate could remain above the 10% mark up to 2016.
Its report says the €12.4 billion of budgetary measures planned for the 2012-2015 period will be an additional drag on growth, but it believes "prospects for recovery should not be undermined significantly".
The IMF warns, however, that the Government's plans to increase tax revenue in the years to 2015 "will likely need to encompass income tax bands and credits".
On the sale of state assets, the IMF says it is important to avoid "fire sales". It says the question of whether proceeds from any sales could be re-invested in the economy is "under continuing discussion".
The IMF has also agreed to a request from the Government to bring forward money due from the IMF later in 2012 to the first quarter of the year, due to recent turbulence in the financial markets.
