IMF Urges Ireland to Rein in Public Spending and Reduce Reliance on Corporate Tax Revenue
Dublin: The International Monetary Fund (IMF) has called on the Irish government to curb public spending, reduce its dependence on corporation tax receipts from multinational companies and broaden its tax base through stronger revenue from income tax, VAT and local property tax.
The recommendations come amid concerns that government expenditure has consistently exceeded planned limits in recent years, prompting the IMF to urge a more sustainable approach to public finances.
Ireland previously received a €67 billion international bailout in 2010 following the global financial crisis, with the IMF playing a key role in the rescue programme.
Call for Fiscal Discipline
In its latest assessment, the IMF said current spending should be carefully managed and warned that excessive expenditure could leave the state more vulnerable to future economic shocks.
The organisation also stressed the importance of introducing structural reforms to address key long-term challenges, including:
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Tackling Ireland’s housing shortage
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Strengthening energy security
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Preparing the economy for the growing impact of artificial intelligence
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Ensuring financial supports for households are temporary, targeted and fiscally sustainable
Growth Forecast Revised
The IMF forecasts Ireland’s domestic economy will expand by 2.5% this year, significantly lower than last year’s estimated 5% growth.
The report said weaker employment growth and slower increases in real household incomes are expected to dampen private consumer spending in the coming months.
Finance Minister Simon Harris said the government is closely monitoring the IMF’s assessment, particularly its warnings about external risks.
He highlighted challenges including rising geopolitical tensions, the effects of deglobalisation, domestic capacity constraints and continued uncertainty surrounding corporation tax revenues from multinational firms.
Meanwhile, public expenditure minister Jack Chambers said the government remains focused on removing barriers to infrastructure delivery while supporting housing construction and maintaining Ireland’s economic competitiveness.
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