IMF says Government could delay Budget cuts if growth slows
The International Monetary Fund has said Ireland could delay some of the Budget cuts required under its bailout programme if the economy grows more slowly than expected next year.
The Washington-based lender said Ireland had so far shown “steadfast policy implementation” with the conditions of its loan programme, despite slower growth this year
The IMFs board agreed yesterday to disburse around €890 million to Ireland after it completed the eight review of the Irish bailout programme.
David Lipton, the IMF’s first deputy managing director, said Ireland had met all targets so far in its two-year-old bailout programme.
But the IMF projected growth would slow to 1.1 per cent in 2013, and 2.2 per cent in 2014, making it more difficult for the Government to meet debt-to-GDP targets.
This ratio, which reflects the sustainability of debt, is expected to peak at 122 per cent in 2013.
“If next years growth were to disappoint, any additional fiscal consolidation should be deferred to 2015 to protect the recovery,” Mr Lipton said in a statement.
Mr Lipton also said Irelands access to the markets would also be greatly enhanced by “forceful delivery” of European pledges to improve programme sustainability, especially by breaking the vicious circle between Irish sovereign debt and the banks.
“By supporting medium-term growth and debt-reduction prospects, this would help avoid prolonged reliance on official financing,” he said.