Q&A by Donal O'Donavan
Q What's this about missing budget targets? I thought we had achieved all our goals and are ready to leave the bailout?
A Ireland has not missed any of the main targets set under the terms of the EU/ IMF bailout.
However, the OECD warned that we are set to miss a deadline to reduce the budget deficit to 3pc of the size of the economy by 2015. Ireland has been moving heaven and earth to meet that target.
Q Is that because we did not cut enough in the Budget?
A No, the problem is less about Ireland and more about the global situation. The warning for Ireland comes because the OECD has cut its forecast for gross domestic product (GDP) growth globally by around half a percentage point for this year and for 2014.
It now thinks the world economy will grow by 2.7pc in 2013 and by 3.6pc in 2014.
Ireland relies more than most countries on exports, so a slowdown in world growth hits us hard.
Q Can you back up a minute, who or what is the OECD, and why do we care what they think?
A The Paris-based Organisation for Co-operation and Development is a type of club for countries, mainly well off countries.
Unlike the EU it's a fairly loose group, but it has been around for 50 years and has played a significant role in forging common understanding between countries on major policies such as free trade and how taxes are arrived at, though not tax rates.
We care because it is a big, credible, global organisation, and the warning about the threat to the global economy is timely.
Q Why did they pick on Ireland?
A They didn't, we are just one of the many countries commented upon in the latest of the OECD's twice yearly global outlook reports.
Q What happens if we miss the target?
A In a worst case scenario the European Commission can impose fines or other sanctions on a country that misses targets – under rules called the "excess deficit procedure". That is unlikely however. Under Europe's so called "two pack" deal Ireland and all other EU countries share budget data throughout the year.
If by the end of next year it looked like Ireland could miss the 2015 target, there would probably be budget action taken. If the miss was minor – as the OECD suggests – Europe might agree to give the country extra time to reduce spending.
Q How have the markets reacted?
A The bond markets shrugged of the news yesterday. Borrowing costs for much of Europe rose after the OECD report was published, but fell slightly for Ireland.
Q Anything else we should be aware of in there?
A One big warning this time around is about the US. The OECD is worried about the impact of the so called US debt ceiling – they want it scrapped.
The OECD wants the US to come up with a new, less rigid plan to cut its debt.
It also warns that growth in emerging markets like Brazil and India will be a lot less than previously thought.