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Cabinet agrees not to make €500 million payment into the country's rainy day fund

There is currently no money in the rainy day fund which was set up in 2018.

The government raided the fund last year to pay for the pandemic.
The government raided the fund last year to pay for the pandemic.
Image: Shutterstock/FabrikaSimf

FINANCE MINISTER PASCHAL Donohoe received Cabinet approval today to bring a motion before the Dáil requesting that the annual €500 million contribution not be paid into the Government’s rainy day fund.

The minister needs Dáil approval not to pay the prescribed 2021 contribution from the Central Fund into the National Surplus (Exceptional Contingencies) Reserve Fund – the so-called rainy day fund.

There is currently no money in the country’s rainy day fund as it was raided last year for pandemic expenses.

Donohoe said that he is satisfied that, due to the exceptional circumstances posed by the pandemic and the spending required to remedy or mitigate the impact of the Covid-19 virus, making the payment would “place an undue burden on the public finances”.

The minister said that the impact of Covid-19 on the public finances was clear earlier this year, and therefore making the payment was not included in the April’s 2021 Stability Programme Update, the Summer Economic Statement or in Budget 2022.

Ever since the bank bailout, there has been discussions about a rainy day fund, with the then Finance Minister Michael Noonan proposing the idea back in 2016.

Fianna Fáil’s Michael McGrath, now Public Expenditure Minister, had previously floated a similar plan the year previous. 

Announcing the establishment of the fund in 2018, Donohoe said money would start going 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.

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Donohoe has previously said that the medium-term plan is to get the fund up to approximately €8 billion. However, due to the pandemic, the government was forced to raid the coffers early.

Under the law, the minister must seek Dáil Éireann’s agreement not to make the prescribed annual payment of €500 million in any of the years from 2019 to 2023.

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