The government raises an emergency fund of 1,500 million euros for the 2021 budget TheJournal.ie

THE CABINET HAS approved the withdrawal of 1.5 billion euros from the state fund for “difficult days” for the 2021 budget.

The budget day will take place next Tuesday, October 13, and will establish how the government plans to plan for the pandemic and Brexit.

Since the bank bailout, there have been discussions about an emergency fund, and then-Finance Minister Michael Noonan proposed the idea in 2016. Fianna Fáil’s Michael McGrath, now Minister of Public Expenditure, had previously unveiled a similar plan the year previous.

Announcing the establishment of the fund in 2018, Donohoe said that money would begin to flow into the fund in 2019, first with an initial deposit of € 500 million, followed by further annual contributions of € 500 million in 2020 and 2021.

It is not yet clear if those additional contributions will now be made in light of the public health crisis.

Donohoe had said that the medium-term plan is to bring the fund to about 8 billion euros. However, due to the pandemic, the government has been forced to loot the coffers early.

Last year, the minister said the fund would not be raided to deal with the consequences of Brexit.

An information note from the Finance Department to Finance Minister Paschal Donohoe on the fund, which was released under Freedom of Information last year, notes that the fund would only be used “for an extreme result.”

A presentation by Fianna Fáil on the fund last year noted that the fund should be used in the event of a “natural or other disaster, but it could also be another threat,” such as Brexit.

The Finance Department indicated that the fund can only be used to mitigate severe events, as opposed to normal fluctuations in the business cycle.

The Rainy Day Fund can only be implemented to:

• An unusual event beyond the control of the Member State and with a significant impact on the financial situation of public administrations or
• A severe economic recession.

In announcing the government’s decision, Donohoe said:

“The withdrawal of the 1.5 billion euros from the Rainy Day Fund is intended to remedy or mitigate the exceptional circumstances arising from Covid-19.”

The move to withdraw the funds was previously marked in April.

The disposition of the fund requires the approval of a resolution by Dáil Éireann.

“We are in exceptional times. The fact that our public finances have been managed with such care in recent years put us in a good position and allowed us to deal with such contingencies. It is appropriate now that we release the funds that are at our disposal, as we work to meet the needs of our people, support businesses and fight to stabilize our economy once again, ”he said.