Italy should abide by European budget rules and must settle its differences with Brussels over higher state spending in talks with the EU’s executive, a senior IMF official has said.

The International Monetary Fund (IMF) has urged the Government not to cut taxes in future Budgets.

The IMF warned policymakers not to get too comfortable even as it raised its global growth forecast amid brightening prospects in the world’s biggest economies.

The IMF threatened the independence of the Irish judiciary demanding changes as part of the austerity programme, according to the European Justice Commissioner, Viviane Reding.

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 International Monetary Fund (IMF) has trimmed its forecast for global economic growth for this year and next year.

Finance Minister Brian Lenihan has offered to allow a Dáil debate next week on the handling of Ireland's economy.

The Government is coming in for major criticism in the Dáil this morning over last night's IMF report on the state of the Irish economy.

Finance Minister Brian Lenihan has described yesterday's IMF report on the Irish economy as a vote of confidence in the Government's handling of the financial crisis.

The Government is coming under fire following a scathing report from the International Monetary Fund last night about the state of the Irish economy.