Second transfer brings money for rainy days to 6 billion euros

The state has transferred €4 billion into its new rainy day fund, the second payment it has made since last September’s budget.

t increases the balance of the so-called national reserve fund to 6 billion euros, the total announced on Budget Day last year.

The fund – formerly known as the National Excess Reserve Fund – was established in 2019. In 2020, the government used the 1.5 billion euros that had been transferred the previous year to pay for pandemic aid.

The new fund is not to be confused with the National Pensions Reserve Fund, which helped finance the 2009 bank bailouts and was merged into the Irish Strategic Investment Fund in 2014.

Treasury Secretary Michael McGrath said the €4 billion transfer to the reserve fund came from excess corporate tax revenue which the government said will not last.

“There are future costs we need to be prepared for, including the consequences of an aging population, digital transformation and climate change.

“Recent history has taught us that we must also be prepared for unforeseen challenges that are becoming more frequent and more impactful.

“Today’s transfer of 4 billion euros to the national reserve fund is an important step in this preparation.”

The move comes a week after the government announced it had raised an additional €800 million in tax revenue in January compared to the same month in 2022.

It led to a cash surplus of 2.8 billion euros, higher than at the same time last year.

In 2022, the budget surplus was around €4 billion above estimates, at over €5 billion.

But last week, the Treasury Department’s annual government debt report pointed to vulnerabilities in public finances in a shock to the multinational sector.

If Ireland’s ‘windfall’ corporate taxes were eliminated – which are expected to rise to around £10bn in 2022

A larger shock that hits energy prices, pushes up interest rates and slows global growth could cause the debt-to-GDP ratio to rise by 25 points by 2025, the report said.

Mr McGrath said the state’s underlying fiscal position “is not as strong as the headlines suggest”.