Government must meet €5.1bn target, IMF warns

The IMF has told the government it must meet the terms of the bailout agreement and remove a total of €5.1 billion euro from the economy over the next two years.

Earlier this week, the Finance Minister Michael Noonan said that the tax rises and spending cuts contained in next week's budget will be less than the €3.1bn figure agreed for this year.

If the target is lowered this year, it will have to be made up for in future, the IMF said.

"Ireland should maintain its track record of steady fiscal consolidation," said Craig Beaumont of the IMF. "Discussions with the authorities are continuing."

"You adopt a consolidation path, and then if growth is stronger or weaker … you don't change the amount of measures you've already got working."

In the report, the IMF says the economy will grow by just 0.6% this year, less than half of the government’s forecast.

It also said that even if the mortgage arrears crisis is resolved, any benefits households get to their finances is unlikely to feed through to the economy.

The report also urges the government to speed up reforms of the labour market to get the long-term unemployed back to work.

It said the government has agreed to outsource some retraining services to the private sector.