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Child benefit just went up €5 - now IMF wants to cut it

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Craig Beaumont, IMF Mission Chief to Ireland

Craig Beaumont, IMF Mission Chief to Ireland

Finance Minister Michael Noonan said that he welcomed the IMF’s statement

Finance Minister Michael Noonan said that he welcomed the IMF’s statement

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Craig Beaumont, IMF Mission Chief to Ireland

The Government should consider making targeted reductions in child benefit, the International Monetary Fund (IMF) has said - despite the increase in last October's Budget.

The Government increased the child welfare payment by €5 per child, per month, to €135 this year.

Another €5 increase is possible in 2016, depending on the state of the economy.

But the IMF - which is one of the three bodies that makes up the troika - said it's important that social protection spending, which increased hugely at the height of the economic crisis, declines as the economy recovers.

"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 (pictured) said.

"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."

Mr Beaumont was in Dublin as part of an IMF mission looking at Ireland's fiscal plans for the medium to long term.

The IMF said Ireland should keep up-to-date housing valuation figures in order to protect the property tax base and guard against another property bubble, in a statement released yesterday.

Mr Beaumont said any moves to increase public sector wages would have to take account of tight fiscal constraints in Ireland.

"We just point out there is in fact very limited room within the budget for a hike in wages. These are matters to be discussed by the Government and by the relevant unions, and it's not our role to become part of those discussions, but the overall fiscal situation indicates modest room."

The IMF said Ireland's recovery is off to a good start, but that sustained solid growth and job creation over a number of years is needed to repair the damage from the crisis.

"The durability of the recovery will benefit from three main ingredients: putting the public debt burden on a firmly downward path, tackling the most entrenched private debt distress, and reviving lending while avoiding renewed vulnerabilities," it said.

Finance Minister Michael Noonan said that he welcomed the IMF's statement.

"The Government is fully aware of the importance of sound budgetary policy in the years ahead, and is committed to a steady adjustment path in reducing debt and maintaining stability," Mr Noonan said.

Irish Independent