IMF: Euro instability poses risk to Irish recovery

The IMF has warned that a failure to address the crisis in the euro could set back Ireland's hard-won gains since entering the bailout.

In the organisation's latest official staff report, the IMF's Ajai Chopra has given full marks to Ireland for our implementation of the bailout conditions, saying all targets for last month's review were achieved.

The report also says that a further strengthening of European support for Ireland’s recovery would reinforce prospects for program success, with benefits for European stability.

But the report goes on to warn about external risks, namely weak global growth.

And in a clear warning to European leaders, it says disorderly financial or debt developments in the euro area could spill back into confidence in Ireland, potentially undermining hard-won gains in financial stability.

It also warns that negative domestic factors need to be kept in check, saying household deleveraging, and the potential for higher emigration need to be watched.