The International Monetary Fund has expressed support for Labour leader candidate Joan Burton noting she wants to maintain the agreed bailout fiscal targets.

The possibility of the domestic banks having to raise new capital following the ECB stress tests "cannot be precluded" even though AIB, Bank of Ireland and Permanent TSB all passed the Central Bank’s Balance Sheet Assessment (BSA) at the end of 2013, according to the IMF in its latest review of the Irish economy.

It is unfair to impose bank losses on the ordinary citizens, and budget cuts in a time of crisis should be gradual — these are the two main lessons arising from Ireland’s bailout programme, according to the IMF’s Ajai Chopra.

Finance Minister Michael Noonan will determine the size of October’s budget cuts based on tax revenues and not growth forecasts, he said.

Social welfare benefits are too high in Ireland and need to be revised to encourage people back to work, the International Monetary Fund (IMF) has said.