The International Monetary Fund (IMF) has told the Irish government it must meet the terms of the bailout agreement and remove a total of €5.1 billion from the economy over the next two years.
Earlier this week the Finance Minister Michael Noonan said that the tax rises and spending cuts contained in the budget next week will be less than the €3.1 billion figure agreed for this year.
In the report the IMF says the economy will grow by just 0.6% this year - less than half of the government forecast.
It also says that even if the mortgage arrears crisis is resolved, any benefits households get to their finances is unlikely to feed through to the economy.
The report also urges the government to speed up reforms of the labour market to get the long-term unemployed back to work.
It says the government has agreed to outsource some retraining services to the private sector.
Craig Beaumont of the IMF says anything that comes off in the Budget this year will have to be added back on next year.