The Coalition is again being told to impose another austerity Budget of €2.1bn in October.
The IMF - in its first assessment of Ireland post the Troika bailout - says the tough Budget is needed for credibility.
The IMF effectively stated that the recovery has taken hold in Ireland, describing the revenue performance to the end of May as “solid”.
However, it has warned of the dangers of continuing high unemployment, mortgage arrears and the high debt levels for the country and its citizens.
Regarding October's Budget, it said that Ireland must continue in its attempts to get the deficit under 3%.
The IMF says a correction totalling 1.25% of GDP, or close to €2.1bn, is needed to safeguard the hard-won credibility.
Public Expenditure Minister Brendan Howlin says it is too early to say if that much austerity will be needed.
“We’re making no budgetary decisions until we see what the end-of-year budgetary situation will be like, closer to October,” he said.
“But the auguries are good.”
Earlier, the Taoiseach said it is the Cabinet who will make the decision on Budget adjustments.