The "official" Government response to the latest advise from the International Monetary Fund was to politely thank it for its views. No one, however, is under any illusion that the IMF's worthy analysis, recommending no tax cuts in the Budget , will be followed.

Indeed, the political jockeying in Government to claim credit for the forthcoming bonanza is already well under way and the only questions remaining are: by how much will taxes be cut in December and how precisely will the package be structured ?

Once a year, the executive directors of the IMF - effectively the group of senior executives in one of the main international economic institutions - sit down to assess each member economy. Their last report in October 1988 noted that room for lowering the tax burden "might be limited". This year, they have bluntly stated that "further tax reductions should not be included in the 2000 Budget."

The unspoken warning is that to do so might set the economy on a path to rising inflation, which would be debilitating in the long term, or even to a "bust" following a period of overheating.

As we are members of the euro zone, the traditional measure of higher interest rates is not available. Because of this, some IMF directors went as far as calling for an overall tightening of budget policy in the short-term - meaning higher taxes and/or lower Government spending - "if inflationary pressures continued unabated". Given the extent of the Government surplus, just how they thought such a strategy might prove politically acceptable is not spelled out.

Clearly, a tight Budget is a complete non-runner, perhaps encouraging some other IMF directors to confine themselves to calling for measures to attack the problem areas of rapid house price growth and the related strong rise in borrowing. However, the IMF directors were united in the view that there should be no net reduction in the tax burden in the Budget. In other words, any cuts in one area of taxation should be offset by increases elsewhere; as the directors point out, reductions in tax rates would be acceptable, but only if accompanied by a widening of "tax bases" to ensure that the overall effect was not a fall in the tax burden.

"Widening tax bases" sounds innocuous enough, but translate it to VAT on food or new property taxes and see how it plays. Behind it all, surely all the IMF can hope to achieve is to sound a note of caution to the Minister for Finance and his colleagues as they frame their Budget.

Some of the directors also warned of the risk of a "bubble" in the price of assets - mainly houses - and the impact that a subsequent bust could have on the financial sector. They called for close policy analysis in this area.

In fairness to the IMF, its analysis is based on standard economic principles. The problem is that politics also intervenes, meaning that rather than applying a touch on the brakes, the forthcoming Budget will instead throw more fuel on the economy's engine. Some of the IMF directors warn that moderate wage agreements in a new national programme should not be "bought" with tax cuts that the economy does not need. Instead, policy-makers should work to develop performance-related pay incentives.