The Government should consider making targeted reductions in child benefit, the IMF has said.
It’s important that social protection spending, which increased hugely at the height of the economic crisis, declines as the economy recovers, the IMF added.
“We’re not suggesting cuts in social protection across the board, we believe there could be some savings from a targeted approach but definitely leaving full protection for low-income households,” IMF mission chief Craig Beaumont said this afternoon.
“It’s more a matter of where benefits are universal and are going to households who may be already relatively well-off financially, there could be some consideration of scope for savings in some areas.
“We’ve commented in the past on child benefit and that would be the most obvious candidate to consider further targeting.”
The IMF said a phase-in of the Central Bank’s proposed mortgage caps could be risky because it might encourage a load of borrowers to seek mortgages quickly, particularly when house prices are rising.
That could lead to “inappropriate risk evaluation”, Mr Beaumont said.