IMF questions Irish hopes of ditching austerity after 2015

DUBLIN (Reuters) - The International Monetary Fund questioned Ireland's plans to end eight years of austerity with one more tough budget next year, saying more measures would be needed to meet a requirement of balancing its budget by 2018. Ireland has taken 30 billion euros (24.02 billion pounds) or close to 20 percent of annual output out of the economy since 2008 by hiking taxes and slashing spending as a result of a financial crisis that saw it seek a bailout from the European Union and IMF in 2011. The government has committed to one more round of austerity next year with tax rises and spending cuts of up to 2 billion euros earmarked to bring its deficit below 3 percent of gross domestic product (GDP) by an EU-deadline of 2015. Dublin believes increasing economic growth and a cap on spending will be sufficient to cut the deficit to zero by 2018 but in its first report since Ireland completed its bailout last year, the IMF said growth and discipline alone would not be enough. "Although some structural balance improvement would be achieved through expected reductions in the interest burden and lower demand for social supports, new discretionary measures will need to be a major contributor to adjustment in addition to continued restraint of welfare and pay rates," the IMF said. The IMF's appraisal is based on less optimistic growth projections. It sees Irish GDP growing by 1.7 percent this year, 2.4 percent next year and by 2.5 percent in 2016 compared to government forecasts of 2.1 percent, 2.7 percent and 3 percent. Ireland sees growth expanding to 3.5 percent in 2017 and 2018, while the IMF sees its staying flat at 2.5 percent. The IMF's predictions follow comments from the European Commission earlier this month that Ireland's medium-term forecasts are optimistic. (Reporting by Padraic Halpin; Editing by Elaine Hardcastle)