IMF Report Cautiously Optimistic On Irish Economy

by Jason Gorringe, Tax-News.com, London

08 August 2003

The IMF has given a mixed assessment on the Irish economy in its Article IV Consultation for 2003.

Whilst the report praised the country's previous economic policies which led to high rates of economic growth through the 1990s, it raises concerns about growing unemployment and the effect this may have on the banking sector, which has enjoyed something of a credit boom. This may also have serious implications for the country's property market, which has remained very buoyant in recent months despite sluggish growth in other sectors of the economy.

In making recommendations for Ireland's future fiscal policy, the IMF urged the government to cut spending rather than raise taxes if revenues continue to fall short. However, it states that broadening the tax base and raising fees rather than taxes is a more acceptable method to increase revenues.

The IMF has also warned Ireland to reduce inflation (currently at one of the highest rates in the European Union) and improve its international competitiveness. Nevertheless, the report's authors are cautiously optimistic in terms of economic growth, forecasting a 1.5% increase in GNP this year, followed by more robust 3% growth in 2004 as consumption and exports recover.

Recommended