IMF and the Irish Budget 2012

It looks like the  IMF  will be directly involved in deciding the details of  tax rises and  spending cuts in Budget 2012.

The 2012 Budget will be announced in December 2011 – and the Government plans to take about €4bn out of the economy  – either in tax increases or cuts in public sector spending.

In the past in other countries – the  IMF seem to have favoured  favour spending cuts over tax rises – but the new property tax and water rates are still firmly on the agenda.

Ajai Chopra of the IMF  was commenting on the Irish economy – he  said

“Look at the positive elements in the case of Ireland. We are starting to see to signs of growth in the economy and the economy stabilising after three years of very wrenching adjustment,”

Chopra also said –   “This Government has developed a great deal of fiscal credibility. The Government has the political will and the determination to implement this programme. If it wasn’t for contagion we would be seeing a very different result,”

When asked which would be least damaging to the economy — tax rises or spending cuts — and whether the choice should be left to the Government alone.  he replied  …. “I think this is an issue we will have to address in the context of the next review,”