IMF sees Irish economic growth below government forecasts

WASHINGTON (Reuters) - Ireland's economy is recovering and should grow 1.7 percent this year, but significant challenges linger, including weak job growth and lending, the International Monetary Fund said on Friday.

The Irish government expects the economy to expand 2.1 percent in 2014 and 2.7 percent in 2015 after becoming the first euro zone country to complete its IMF-EU bailout last year. The IMF predicts growth of about 2.5 percent next year.

In Dublin for the first review after the bailout, the IMF also urged Irish officials to stick by planned tax hikes and spending cuts for next year totalling 2 billion euros (1.66 billion pounds) to drive down one of the highest public debts in Europe.

"Finishing the job of putting the budget on a sound footing will help protect Ireland's recovery," IMF mission chief Craig Beaumont said in a statement. Ireland's gross public debt was 124 percent of GDP at the end of last year.

Ireland went against IMF advice when it eased back on its budget program for 2014 last year, giving voters a modest break from six years of austerity. The deficit-cutting drive has seen 30 billion euros or close to 20 percent of annual output taken out of the economy.

"Exiting the (bailout) programme was not the end in itself and this government remains fully committed to stabilising the public finances," Irish government officials said in a statement following the IMF's visit.

(Reporting by Anna Yukhananov; Additional reporting by Padraic Halpin in Dublin; Editing by Meredith Mazzilli)