The economy faces another year of tepid growth- and the recession could drag on if Government spending isn't reined in, according to the IMF.

In their latest report, they recommended the Government stop funding cost-of-living handouts, press ahead with fair pay agreements and prioritise climate change-focused infrastructure spending.

BusinessDesk managing editor Pattrick Smellie says targeted, means-tested spending presents a huge challenge for the Government in an election year.

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