The IMF has held consultations with Ireland in connection with Article IV of its articles of agreement and a Concluding Statement has been published setting out the preliminary findings of its staff. The IMF considers that the high economic growth in 2014/15 is likely to slow to some extent and the favorable market conditions could deteriorate. Growth will slow to around 4% in 2015. Ireland should be considering a measured amount of new government spending and of tax reforms each year to ensure a steady fiscal adjustment towards achieving a balanced budget.

Investment and employment have recovered from the financial crisis and consumption is increasing as household incomes improve. However debt is still a problem for households, and for small and medium enterprises. Although the short term prospects for the Euro area have improved there are still external risks for Ireland’s economy.

Government revenue has grown at double digit rates in the first quarter while government spending remained within the budgeted amounts. The deficit is therefore likely to be below the target in 2015, at around 2.3% of GDP. Revenue could exceed official projections and excess amounts should be saved to ensure that adjustment continues at the correct pace.

Government spending on education and health is likely to rise in future owing to demographic pressures. Higher capital spending will also be required. Efficiency gains in government will therefore continue to be required.

Tax reform needs to be focused on the areas that will favor job creation and increase productivity. Progress also needs to be made with broadening the tax base. Steps need to be taken to increase government revenue while ensuring that fiscal adjustment continues.