{"id":524602,"date":"2026-06-29T19:05:16","date_gmt":"2026-06-29T19:05:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/524602\/"},"modified":"2026-06-29T19:05:16","modified_gmt":"2026-06-29T19:05:16","slug":"imf-warns-government-not-to-stoke-irelands-full-capacity-economy-with-needless-spending-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/524602\/","title":{"rendered":"IMF warns Government not to stoke Ireland\u2019s full-capacity economy with needless spending \u2013 The Irish Times"},"content":{"rendered":"

With the Irish economy operating at full capacity and inflation still elevated, the Government<\/a> should \u201cavoid injecting unnecessary demand stimulus\u201d in the budget<\/a>, the International Monetary Fund<\/a> (IMF) has warned.<\/p>\n

In its latest assessment, a preliminary version of which was published last month, the Washington-based fund said any discretionary fiscal spending should be temporary and targeted.<\/p>\n

\u201cFiscal policy should achieve a broadly neutral stance while scaling up public investment efficiently,\u201d it said.<\/p>\n

The Government has exceeded its annual spending target by an average \u20ac5.1 billion in each of the last three budgets, with most of the overruns being driven by day-to-day rather than capital spending.<\/p>\n

Minister for Public Expenditure Jack Chambers<\/a> has written to all Government departments warning them to rein in spending while indicating he plans to introduce enhanced oversight mechanisms before the budget.<\/p>\n

In its report, the IMF welcomed the Government\u2019s \u201ccommitment to accelerating public investment\u201d while highlighting housing and infrastructure gaps as a source of vulnerability for the economy.<\/p>\n

It said the Irish economy had remained resilient in the face of consecutive economic shocks and is projected to grow \u201cat a slower but still robust pace\u201d because of higher energy prices and ongoing global uncertainty.<\/p>\n

[\u00a0AI could impact more than 40% of all jobs in Ireland, IMF warnsOpens in new window<\/a>\u00a0]<\/p>\n

Growth in modified domestic demand \u2013 a more accurate measure of the domestic economy \u2013 is projected to moderate from almost 5 per cent in 2025 to about 2.5 per cent in 2026\u20132027, largely reflecting a softening of private consumption due to weaker employment and real income growth.<\/p>\n

At the same time, headline inflation is projected to rise to about 3.5 per cent this year before returning to 2 per cent around 2028. The IMF cautioned, however, that its outlook is subject to elevated uncertainty, with downside risks to growth and upside risks to inflation.<\/p>\n

As well as housing<\/a> and infrastructure, the IMF highlighted the economy\u2019s increasing reliance multinationals as \u201ca source of vulnerability\u201d.<\/p>\n

\u201cGiven these vulnerabilities and risks in a more shock-prone and fragmented world, Ireland cannot take its resilience for granted and should use the current window to address vulnerabilities, improve productivity and secure lasting prosperity,\u201d it said.<\/p>\n

Broadening the tax base and strengthening the national fiscal framework would reduce vulnerability to the highly concentrated corporate tax base and help prepare Ireland for long-term challenges related to ageing and the green transition, it said.<\/p>\n

Minister for Finance Simon Harris<\/a> welcomed the IMF\u2019s assessment, describing it as a \u201cuseful economic stock-take\u201d that \u201chelps shed light on our relative strengths and weaknesses\u201d.<\/p>\n

\u201cI note and share the IMF\u2019s assessment of external risks, notably the reversal of globalisation, the ongoing disruption caused by regional conflicts, domestic capacity constraints and the uncertainty in relation to corporation tax receipts,\u201d Harris said. <\/p>\n

Also welcoming the report, Chambers said: \u201cToday\u2019s IMF report reflects the continued strength of the Irish economy, in the face of heightened global uncertainty and rapid technological advancement.<\/p>\n

\u201cI share the IMF\u2019s view that addressing structural issues is key to maintaining economic growth, and in particular the need to address the challenges and bottlenecks present in infrastructure delivery,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"With the Irish economy operating at full capacity and inflation still elevated, the Government should \u201cavoid injecting unnecessary…\n","protected":false},"author":2,"featured_media":524603,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[5168,72,1523,3662,61,21326,60,13808,70],"class_list":["post-524602","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-budget","tag-business","tag-government","tag-housing-crisis","tag-ie","tag-international-monetary-fund","tag-ireland","tag-jack-chambers","tag-simon-harris"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/524602","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=524602"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/524602\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/524603"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=524602"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=524602"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=524602"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}