THE International Monetary Fund (IMF) has praised the Government and said it will lend Ireland a further €970m as part of the bailout plan.
However, in its ninth review of Ireland's financial status, it also warned that the Government needed to continue to rein in health spending, as well as strictly enforce the controversial property tax.
As Cyprus totters on the edge of chaos, the Washington-based IMF last night said Ireland's "strong policy implementation has continued and positive signs are emerging".
It pointed to recent economic indicators that suggest a revival of domestic demand.
But it warned that the Government must remain vigilant this year.
"Building on the strong budget out-turn for 2012, sound budget execution remains critical in 2013, including continued vigilance on health spending and a successful introduction of the property tax," the review read.
It also cautioned that Irish banks remained weighed down by bad loans.
The fund praised the Government's decision to press banks to repossess more houses when owners default on mortgage payments. The IMF and other members of the troika have been pressing for reforms to allow more repossessions almost since the bailout began in 2010.
However, on a more positive note, it pointed to recent successes in Ireland.
It hailed this month's bond sale, which raised €5bn on the markets, and new figures that show that the economy expanded 0.9pc last year, the second year of consecutive growth.
"The Irish authorities have pursued steadfast policy implementation for more than two years and positive results are emerging," said IMF official David Lipton. "Nonetheless, problem loans remain high and accelerating their resolution is a key to economic recovery."
IMF boss Christine Lagarde called for reforms during her recent visit to Dublin. The IMF repeated yesterday that the Government must push banks to come to terms with small and medium-sized companies that are in trouble.