In an analysis of the economy, the IMF said Ireland has made huge strides in the last couple of years to improve competitiveness and is benefitting from strong exports.

The healthy prognosis comes as the so-called Troika of lenders of the IMF, the European Commission and the European Central Bank this week conclude their latest review of the €67 billion bailout agreement. That review is expected to be largely positive, though tensions between the government and Troika have emerged in recent months about overspending in some key areas, including the health services and on social welfare.

In a paper published last Friday the IMF said exports have potential to boost government’s tax revenues and it if keeps spending in check it should be able to rescue the ballooning national debt.

The IMF paper said every 1% rise in economic growth cut the debt ratio by 4%.

However, it cautions that the government will have to keep its spending under tight control and that sheltered parts of the economy like the energy and legal sector need to be opened up. It says the boost to trade has come from the drop in costs and a return to the days of big pay rises would jeopardise that.

It also warns that the “the road could be bumpy” due to ongoing international economic challenges.

The report says: “The conclusion that Ireland is poised to find the way back to the future is predicated on the assumption that public spending is kept in check to allow for improvements in government revenue to strengthen the fiscal balance and reduce public debt.”