Social welfare benefits are too high in Ireland and need to be revised to encourage people back to work, the International Monetary Fund (IMF) has said.

The organisation warned that dole payments are high by international standards and responsible for “low exit rates” from the Live Register.

As the IMF forecast the economy to grow by just 0.5% this year, it said that certain welfare payments should be means-tested to avoid long-term unemployment.

The organisation – one of three bodies overseeing Ireland’s €85bn bailout – suggested people out of work should be willing to take jobs regardless of suitability.

“It is also important to ensure that jobseekers are willing and able to fill jobs when they become available,” it said.

IMF Ireland mission chief Craig Beaumont suggested that eligibility for child benefits should be narrowed, targeting only families that are “relatively less well-off”.

He described child benefits as an expensive part of the social welfare budget and suggested limiting the number of medical cards issued.

Mr Beaumont pointed out that as people are living longer, the Government will otherwise be forced to hand out more and more of the cards.

“The cost of those medical cards will keep on rising. One way you can contain that is to look to some means-testing on eligibility,” said Mr Beaumont.

The IMF bosses also praised the Government - for its implementation of the Croke Park Agreement, its €2.25bn stimulus plan announced yesterday and its continued work to meet its debt repayment targets.

Mr Beaumont said the Croke Park Agreement – a pact between the Government and public sector workers aimed at protecting jobs while scaling back resources - had made significant savings.

“It has been done in a way which has enabled public services to be protected and for gains to be achieved,” said Mr Beaumont.

“There will be a need to continue to monitor those savings and make sure service provision is monitored going forward.”

He added that Government plans to fund new public infrastructure projects – in roads, schools, health services and justice – with money from the European Investment Bank, National Pension Reserve Fund and sale of state assets would further benefit the economy.

The chief also pointed out the off balance sheet stimulus plan would have a “comparatively small” budgetary impact.

Meanwhile, the deputy director of the IMF's European department, Ajai Chopra, insisted the organisation was working to reduce Ireland's bank debt.

He said efforts must be taken to honour Europe’s commitment to separate Ireland’s sovereign debt from its banking debt.

“The IMF position on burden-sharing is well known. Much of this debt has been repaid,” said Mr Chopra.

“What we now need to be done is to make the June 29 summit commitment into something that helps Ireland.”