The International Monetary Fund has called for support measures to protect vulnerable homeowners in Ireland burdened with mortgage arrears as a result of the financial crisis.

The Washington-based authority says such measures could limit the social and economic fallout of the current crisis, provided they were narrowly targeted.

In a preliminary report issued yesterday, following a recent visit to Ireland, the IMF said Irish policymakers had gained significant credibility as a result of measures taken to deal with the current crisis.

The IMF suggests that the banks, which have absorbed billions in State funds, could use their stronger financial position to fund the scheme on an initial basis.

"With their bolstered capital, banks could absorb the initial costs, perhaps basing themselves on the welfare system to identify eligible beneficiaries. This process will be aided by an overdue shift to a more efficient and balanced personal insolvency regime," it added.

The most recent mortgage figures showed that one in every 25 Irish residential mortgage holders is more than three months behind on their payments.

The head of financial regulation at the Central Bank, Matthew Elderfield, said there was no "silver bullet" solution to the issue of mortgage arrears, expressing concern last month that any such approach could carry the risk of "moral hazard", whereby it could incentivise homeowners to breach their financial obligations.

The IMF, considered to be a global financial watchdog, is broadly positive on the Government's approach to the financial crisis, saying it has gained "significant credibility". However, its report warned of possible “consolidation fatigue” as new problems emerged and more cuts were needed. The agency highlighted the need for new taxes and for making the public service more efficient as “years of tight budgetary control” lay ahead.

IMF experts drew up their report after visiting Ireland last month for two weeks. The trip included a meeting with Minister for Finance Brian Lenihan and consultation with a range of public and private bodies.

The IMF praised Irish policymakers, saying they achieved their goals in a "remarkably socially cohesive manner", while balancing social and economic goals. "These actions have reassured the global policy community and international financial markets."

It also said plans to "proactively reshape" the banking system are appropriate, adding that a market-oriented approach should be applied to the banks in future. The agency also called for strong supervision of lending to small businesses, noting that problematic loans in the sector have grown rapidly.

The IMF concluded that exports would lead the Republic's recovery, with growth to rise to 3.5 per cent by 2015. High unemployment would linger, however, with the experts pencilling in a peak of 13.5 per cent this year and a 9 per cent jobless rate in five years, presuming new policy measures are not taken to address this.

Mr Lenihan yesterday welcomed the IMF’s analysis and acknowledged the importance of keeping faith with the Government’s policies. A spokesman for the Department of Finance said that, at an overall level, the IMF had endorsed the Government’s policies both in relation to the public finances and the banking sector.

He added that the IMF suggestion of targeted support for vulnerable householders was in line with existing Government policy that used the social welfare system to administer the mortgage interest subsidy scheme.

The spokesman said an expert group on mortgage arrears and personal debt would report to Mr Lenihan by the end of June.

Fine Gael’s housing spokesman Terence Flanagan said the IMF report had highlighted the "complete and utter inaction" of Fianna Fáil and the Greens when it came to helping those struggling with debt.