The Government is being warned that it should do 'more than the minimum necessary' to meet a deficit target of 3% in 2015.
The Central Bank is recommending that the upcoming Budget should bring the deficit comfortably below that figure in order to guard against adverse shocks.
In its quarterly economic bulletin, it has upgraded its growth forecast by 2%, to 4.5% GDP for this year.
The report says consumer spending is growing thanks to gradually improving employment and incomes. The upgraded forecast also comes on the back of "a very strong acceleration in recorded export growth."
But it is urging caution for the first post-Troika Budget, saying it should be taken as a chance to enhance Ireland's creditworthiness, while an increase in revenues should be used to reduce debt.
It also says that the markets will be watching closely to ensure that Ireland "continues to build on the achievements of recent years".
