The coalition is again being told to impose another austerity budget of €2.1 billion in October.

In its first assessment of Ireland after the Troika bailout, the International Monetary Fund (IMF) says the tough budget is needed for credibility.

The IMF effectively says the recovery has taken hold in Ireland, describing the revenue performance to the end of May as solid.

But they do warn of the dangers of continuing high unemployment, mortgage arrears and the country's and individuals high debt levels.

And on the October budget the message is clear - stick to the plan to get the deficit under 3%.

The IMF says a correction totalling 1.25% of GDP - or close to €2.1 billion - is needed to safeguard the hard won credibility.

The Public Expenditure Minister Brendan Howlin says it is too early to say if that much austerity will be needed.

Earlier the Taoiseach said it is the politicians in the Cabinet who will make the budget decision.

Just yesterday, the coalition was given another stern warning to stick to the planned €2 billion package in the budget, from the Fiscal Advisory Council.