Irish economy received little respite this week when the International Monetary Fund (IMF) said it is not too optimistic about the Ireland economy. And, this has come as a huge repite for the sliding gold prices on Thursday.

With more and more bad economic news emanating from Europe, the gold prices have slowly started picking up the lost rhythm this week.

Whenever there is uncertainty over the economy of a country or the markets, gold witnesses a safe haven rush which helped the metal gain. On a similar occasion last week when Portugal's economy received bad remarks from the IMF, gold prices zoomed. Same was the case with the Greece economic tragedy.

IMF analysts visited Ireland in May and had discussions with ministers, government officials and outside economists. An unusual degree of disagreement is recorded in the report.

The IMF thinks the Irish recovery will be feeble, dragged down by falling wages and prices, a shortage of bank credit and - despite the wage cuts - a continued lack of competitiveness.

It sees growth averaging just 2% a year from now to 2015. The government thinks it will be close to 4% - although it will be updating its figures in the autumn.

The difference between the two would amount to more than Euro 3bn in tax revenues over the period.

The government is set to miss its budget targets, even if it holds its nerve on the €5bn in tax rise and cuts which it plans for its remaining term of office.

Irish officials agreed with the IMF as recently as May that a property tax would be a good idea. It might initially take the form of a flat payment - like the one on second homes - before moving to one based on property values.

It is not just property tax, though. While it is not new, it is still worth looking at what the department of finance told the IMF about tax plans in the next Budget. They involve eliminating tax breaks, reviewing the income tax bands and consolidating the current levies into the tax and PRSI system as part of a universal social charge.

The IMF adds some welcome common sense to the fractious debate about bank lending and the supply of credit. Banks do not create credit out of thin air and the amount available in the Irish banks is falling as they write off bad loans, deposits shrink, and they are asked to retain more funds as capital.

The report thinks they may not have enough to support even the feeble recovery they expect. British banks have abandoned the Irish market. Shouting for more credit in these circumstances is no better than praying for rain in a desert.

The IMF questions the wisdom of targeting this inadequate supply of credit to particular sectors. The small business sector has been told it will receive €12bn over the next two years. No evidence has been produced as to whether that is the best use for the money.

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