International Monetary Fund staff urges Ireland to keep fiscal policy broadly neutral and strengthen non-bank oversight

The International Monetary Fund published the staff concluding statement for its 2026 Article IV mission to Ireland, saying the economy remains strong but faces slower growth, higher energy-driven inflation, and elevated external uncertainty. IMF staff recommend a broadly neutral fiscal stance, with any support in response to shocks kept temporary and targeted rather than delivered through broad tax cuts, subsidies, or price controls, alongside continued monitoring of financial stability risks and reforms to housing, energy, skills, and EU market integration. Under the baseline, modified domestic demand growth is projected to slow from almost 5 percent in 2025 to about 2.5 percent in 2026-27, while headline inflation is seen averaging about 3.5 percent this year before returning to 2 percent around 2028. Staff assess the fiscal stance in 2025-26 as moderately expansionary and call for tighter control of current spending, better expenditure controls, efficient delivery of infrastructure investment, a broader tax base to reduce reliance on concentrated corporate income tax receipts, and a binding national fiscal rule anchored in a long-term net debt target. They judge the banking sector resilient and the Central Bank of Ireland's 1.5 percent countercyclical capital buffer appropriate, but call for continued stress testing and stronger regulation, supervision, and data for non-banks, while also urging further action to raise housing supply, strengthen electricity infrastructure and EU energy links, and prepare workers for AI-related change. Following the mission, IMF staff will prepare a report for discussion and decision by the IMF Executive Board, subject to management approval.