Further €4.5bn in cuts are needed, says IMF

INCOME tax increases and more cuts in Government spending are needed immediately, the International Monetary Fund has warned in a stark report on the country’s economic state.

They say savings of about €4.5 billion must be made, in addition to the €5.3bn already identified. And it should all be achieved by 2014 to bring the deficit to 3%. The IMF — known for the harsh austerity measures it imposes when called in to rescue bankrupt economies — pours cold water on predictions of more than 3% growth next year. Instead it says it will be 2015 before the economy gradually recovers and achieves a growth of 3.5%.

Reacting to the report, Finance Minister Brian Lenihan said the Government was fully committed to reducing the budget deficit to below 3% by 2014.