The Government has been asked to set "more ambitious" targets to reduce the deficit in 2015 and 2016, by the European Union and the European Central Bank.

They said despite progress the "adjustment process needs to continue and important challenges remain."

The two organisations issued a statement following the conclusion of the latest Troika mission to Dublin. 

They said the Government needed to be "stand ready" to adopt additional measures to address potential future risks to the public finances.  

While they applauded the improved economic performance they sounded a note of caution about the large national debt and high levels of mortgage arrears. 

They said more steps to reduce the gap spending and revenue "would help to bring the still very high government debt-to-GDP ratio on a downward path."

They said latest indications are that the deficit for 2014 is likely to turn out "slightly above" the Government's forecast but well within the original ceiling. 

The two pillars of the Troika pointed out that overruns in the healthcare sector increased compared to last year.

The Health Service Executive's latest performance report showed a deficit to the end of September of €361 million, with the projected year-end overrun predicted to be €510 million.  

The two organisations also said it was essential that Ireland take advantage of "very favourable" funding conditions to return to a normal financial environment.