The International Monetary Fund (IMF), which supervises the world financial system, will deliver a bleak assessment of the Irish economy's prospects in a major report to be released this week.

The annual 'IV consultation report' has the potential to seriously damage Ireland's credit worthiness on international markets. The assessment is expected to be issued tomorrow and will include strong criticism of how Ireland let its property market overheat. It is also expected to say Ireland should try to provide more information on the expected cost of cleaning up the six main banks.

The IMF reports are read and analysed by economists and bond strategists around the world and if the organisation's figures are bleaker than the government's own GDP projections, it could raise Ireland's borrowing costs and lower bank shares.

At present the government is pencilling in almost an 11% budget deficit for 2009, but the IMF is likely to question whether this can be achieved. The body is also likely to warn that the best way to return Ireland to financial stability is via spending cuts, rather than tax hikes.

The report is also likely to include material on the National Asset Management Agency (Nama), which is taking €90bn of loans off bank balance sheets. Any negative commentary in relation to Nama would be a major blow to the government which has stress tested all the main banks to see how they would cope with a further downturn.

The IMF is expected to suggest that these stress tests should be published or at least publish the assumptions used during the stress tests.