The European Commission has formally indicated that it will take a more flexible approach to the implementation of budget rules for Ireland in 2016.
In a reply to a parliamentary question from MEP Brian Hayes, the Economic and Finance Affairs Commissioner said he is confident the commission has found an approach to technical problems raised by the Government.
Pierre Moscovici said this approach would be "mutually acceptable to all member states, including Ireland".
Mr Mocovici said there was already flexibility built into the rules - known as the Preventive Arm of the Stability and Growth Pact - which will apply to Ireland's budget from 2016 onwards.
The Government has been advised of the flexibility available, the commissioner added.
Under the existing method of calculating the amount of spending growth allowed to governments under the rules - known as the Expenditure Benchmark - Commissioner Moscovici said the commission was making technical changes regarding population growth projections and the frequency of updates of the "reference rate of potential output growth".
These would apply to all member states, but would also address Ireland's specific Budget 2016 issues.
Under the previous understanding of the rules, Ireland would have been allowed no growth in spending in Budget 2016.
The new, more flexible approach should allow some growth in spending for 2016 and subsequent years.
The letter comes ahead of tomorrow's Spring Economic Statement, in which the Government is due to set out its medium-term economic strategy, including the amount of spending growth over the next five years.
