Ireland should be allowed miss deficit targets set as part of an EU/IMF bailout if its economy grows slower than expected.
The Organisation for Economic Co-operation and Development made the comments in its latest economic outlook.
Ireland has avoided joining much of the euro zone in recession thanks to robust exports and it expects to record its second year of growth in a row this year.
The Government said earlier this month that despite trimming its forecast for growth, it still expects to cut its budget deficit to 3% of GDP in 2015 from 8.3% this year.
However the OECD said it should be cut some slack if growth disappoints.
"Reflecting a slowdown of the world economy, especially in Europe, ongoing fiscal consolidation and tight credit conditions, the recovery is expected to proceed at an only moderate pace," the Paris-based OECD said.
"If growth turns out to be weaker than expected, however, this should be allowed to show up in slower improvements in the headline fiscal balance."
The Paris-based think tank sees Ireland's economy growing by 0.6% this year, broadly unchanged from its last forecast and better than the downturn seen in the euro zone. It cut its estimate for growth in 2013 to 1.3% from 2.1%.
That is slightly more optimistic than the 0.9% and 1.5% the Government has pencilled in for GDP growth this year and next.
The OECD sees sharp falls in domestic demand bottoming out in 2014 and not 2013, with the weak growth keeping unemployment near 14.6% until the end of 2014.
The organisation said a retroactive recapitalisation of Ireland's viable lenders by European rescue funds would contribute to a more positive outlook.
Global recovery is weakening again
Meanwhile the OECD's latest forecast has said that the world's economic recovery will be "hesitant and uneven" next year, with Europe's debt troubles dragging down growth in more vibrant economies.
The Organisation for Economic Cooperation and Development said the 17-country euro zone is expected to struggle further next year despite recent positive steps to stabilise the crisis. It forecasts a 0.4% contraction this year in the euro zone and 0.1% fall next year.
Elsewhere, the OECD is predicting the US economy will grow 2% next year. The global economy is expected to grow 3.4%.
The Paris-based international agency warned the US and Europe against cutting spending too sharply and too quickly, saying that could further hurt growth prospects.
