DUBLIN Ireland has space to ease up on austerity in 2014, its finance minister said on Wednesday, in comments that look set to put the government at odds with the central bank and its international lenders.
The country is due to complete its 85 billion euro international bailout this year, becoming the first euro zone member to do so, but still needs to keep a tight rein on its finances to maintain market confidence.
After data showed tax revenues were on track at the end of September and that government departments had spent less than planned, Finance Minister Michael Noonan said Ireland could make smaller budget cuts than initially planned.
Ministers have been campaigning to use the slack afforded by a bank debt deal struck with the European Central Bank to bring in a less stringent budget than the 3.1 billion euro ($4.2) package of cuts originally pencilled in.
The budget is due to be presented this month. Ireland aims to bring its budget gap down to 5.1 percent of gross domestic product next year.
"The level of consolidation required to deliver us a deficit of at least 5.1 (percent) and to get us into primary surplus territory, we think we can do it somewhat less than the 3.1 (billion euros) but we still have an awful lot of number crunching to do," Noonan told reporters.
Ireland should hit its deficit target of 7.5 percent of GDP this year, he said.
Earlier on Wednesday, the central bank cut its growth forecast for 2013 for the sixth quarter in a row and said again that the government should not water down austerity in next month's budget.
The International Monetary Fund and ECB Executive Board member Joerg Asmussen have also said the money should be held to cushion the weak economy.
"From our joint perspective, their (lenders') role is to partner us, they are not independent agencies laying down the law," Spending Minister Brendan Howlin said on Wednesday.
"They want a success story in Ireland and they know it's a balancing act."
(Reporting by Padraic Halpin and Sam Cage; Editing by Catherine Evans)