IMF expects Ireland to meet budget targets

The IMF expects Ireland to meet the agreed budget targets over the next two years and reduce the deficit to below 3% by 2015, according to mission chief Craig Beaumont.

The Government will have to maintain budget trimming efforts after 2015, although this should be achieved through a tight control on spending, he said. However, Mr Beaumont said measures such as tax increases and spending cuts could not be ruled out over this timeframe.

He was speaking to reporters following the troika’s 12th and last review of the economy as part of the bailout programme the Government negotiated in Nov 2010.

Mr Beaumont said whether this country should avail of a precautionary credit line when it exits the bailout programme was a matter for the Government. Moreover, there is no deadline for when an application for a credit line has to be submitted.

However, he noted comments made by IMF deputy managing director David Lipton in Rome last month that there were obvious benefits of having a backstop in place as there were still a number of risks looming in the post-bailout environment.

These included the bank stress tests scheduled for next year as part of the EU banking union. If the Irish banks fail these tests and need to be recapitalised, then the Government would have to provide the funding. The domestic banks are still struggling with high levels of mortgage arrears and non-performing loans.

Mr Beaumont welcomed the recent initiative between AIB and the Irish Mortgage Holders’ Association to tackle mortgage arrears.

Growth has been one of the big disappointments over the past few years, but this was attributed to the weak external environment.

On finding a solution for the tracker mortgage problem, any agreement would now have to be done through an EU framework, he said.

The IMF is satisfied that the Legal Services Bill, which is aimed at introducing reforms for the legal sector, is now with the Oireachtas.

Mr Beaumont declined to comment on the length of time this has been with the Dáil on the basis that the IMF does not comment on the parliamentary affairs of any country.

The IMF will now visit the country on a six-monthly basis, although the Washington-based mission chief stressed that this was part of its normal site visits for member countries.