IMF praises Ireland for kick-starting economic growth

Ireland’s government has been praised by the International Monetary Fund for kick-starting economic growth, but urged "decisive" action to deal with banks' bad loans.

In its annual Article IV report on the state of the Irish economy - the first since the end of the bailout programme - the IMF said the economic recovery in Ireland is off to a good start, describing last year’s 5% GDP growth as "robust".

The Irish economy clocked growth of 4.8% last year, helped by a rebound in the commercial and residential property market.

The fund added that the economy is starting to fire on all cylinders, with exports investment and consumer spending all playing a part in producing growth.

The IMF said the revival of consumption is underpinned by improving labour market conditions and low inflation, though did warn that high debt levels are still a drag on economic performance.

The fund warned that households have reduced their debt levels by 20% from the peak, but the household debt ratio is still high by international standards at 177% of disposable income. This compares with 140% in Britain and 100% in the US.

The IMF urged authorities to take further decisive steps to resolve cases of prolonged arrears in order to address private debt overhangs and promote credit flows to the economy. “Measures should include more frequent of insolvency procedures, the IMF said.