The Government has €900m to meet pressures on existing services as part of the upcoming budget, according to Public Expenditure Minister Michael McGrath.
He has briefed his Cabinet colleagues on his expenditure strategy, which will be separated into core spending and Covid spending in next month's budget.
Budget negotiations between Mr McGrath and other ministers will be extremely difficult this year, given the challenges posed by Covid-19 and a possible hard Brexit. While work on the estimates for Budget 2021 is continuing, Mr McGrath said it is a "particularly complex process" this year.
He said: "At this point in the budget process, we estimate that up to €9bn of Covid-related spending will be required in 2021 to support our economy, maintain public services and protect our health service against this global pandemic.
"Within the current overall budgetary framework, which also assumes a no-trade deal Brexit, I am working to an envelope of €900m to meet pressures on existing services across all areas of government. This will be in addition to just over €1bn in pre-committed current expenditure measures and the planned €1bn increase in capital expenditure next year to support investment in the economy.
Mr McGrath said the backdrop to Budget 2021 is one of "unprecedented uncertainty", but that the Government is determined to protect citizens and the economy.
It is expected that next month's budget will also include specific measures targeted at the sectors which have suffered the most as a result of the pandemic.
It has already been indicated that supports for those working in arts and entertainment will be unveiled in October's budget, while a package for taxi drivers is also under consideration.
Separately, the Government has agreed to bid to have the European Centre for Medium Range Weather Forecasting relocated to Ireland.
It was decided that the centre would be moved from the UK to another EU state in the wake of Brexit.
The centre would bring 150-250 jobs and the Government has proposed that it would be located in Cherrywood in Dublin.
The submission has to be in by the start of October and the winning bid will be chosen before the end of the year.
Meanwhile, the Cabinet has approved the heads of a new climate bill which will set in law the 2050 target for carbon neutrality.
The Government will be required to set carbon budgets and ministers will be grilled on their climate change performance under the new legislation.
It is expected that the Climate Action (Amendment) Bill 2020, which was promised in the programme for government, will be published in the coming weeks.
The role of the Climate Advisory Council will be strengthened and it will be tasked with drawing up carbon budgets.
The bill outlines a system of carbon budgets based on scientific advice and which will set a limit to total greenhouse gas emissions that the country will have to stay within for the period defined by the budget.
The first of these budgets is expected next year and will propose an emissions cap for a five-year period.
The Climate Action Plan will contain the measures on how each sector will achieve its decarbonisation targets. The plan will be updated every year, by the government of the day, and will involve public consultation. It will outline immediate, intermediate, and indicative ways, in line with a long-term strategy, to get to the goal of carbon neutrality by 2050.