Business The Budget

Tuesday 2 September 2014

IMF latest organisation to call for full €2bn in tax hikes and cuts in Budget 2015

Tom Molloy

Published 18/06/2014 | 16:49

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Christine Lagarde, head of the IMF

The International Monetary Fund has become the latest organisation to call for the full €2bn in tax hikes and spending cuts in the Budget.

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The Washington-based lender said the Government should stick with the planned adjustment to protect “hard won gains” rather than simply aim to meet next year's crucial EU deficit target

The call for another austerity budget was also made by the Fiscal Advisory Council earlier this week, while the European Commission said last week that it wants more than the €2bn in cuts and tax hikes.

In its first post-bailout review, the Washington-based Fund said the Irish economy is beginning its recovery from crisis but stressed determined efforts were “vital to sustain growth”.

“Unemployment is still high even after a significant decline in recent years, and public and private debt burdens remain a source of risk to the strength and durability of the recovery, in part as very high NPLs (non-performing loans) could weigh on a revival of lending in the medium term,” it said.

The IMF said the Government should impose an adjustment of about 1.25pc of gross domestic product.

The Central Statistics Office estimated GDP last year at €162bn, with 1.25pc of that roughly €2bn.

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