Budget 2023: Dipping into rainy day fund cannot be ruled out, says McGrath 

Michael McGrath said it was “prudent” of the Government to set aside the funds, despite not intending to use them.
Budget 2023: Dipping into rainy day fund cannot be ruled out, says McGrath 

Paschal Donohoe and Michael McGrath pictured with Claire Byrne this morning at RTE Radio Centre. Picture: Colin Keegan, Collins Dublin

The Government cannot rule out dipping into the €6bn rainy day fund early next year to help people struggling with the cost-of-living crisis, the Public Expenditure Minister has said.

Michael McGrath said it was “prudent” of the Government to set aside the funds, despite not intending to use them.

“It is a sensible thing to do it is the right thing to do, ” Mr McGrath said.

He added: “There is an incredible amount of volatility in the international economy, not least in the energy markets.

“We don’t know what will happen with the terrible war in Ukraine.

“But it’s a good thing that we have that reserve. We have that funding there if we need it.

“We don’t intend to use it but we cannot rule anything out.

“It all depends on circumstances. And we will use our best judgment as time goes by, as to what is the right decision or course of action to take.”

Mr McGrath made the remarks after answering questions alongside Finance Minister Paschal Donohoe from members of the public during RTE Radio 1’s Today with Claire Byrne annual budget phone-in show.

Mr Donohoe said the Government had ensured there was a budget surplus so that they have “the ability to help if conditions changed”.

“Michael (McGrath) and I have been united, as has the Government, in saying we’ve brought forward measures that go into a six-month period to provide as much certainty as we can.

“We hope we’ll be in a better place at that point. But the reason why we have a budget surplus is to be able to respond back to conditions that are changing.”

Minister for Finance Paschal Donohoe (Damien Storan/PA)

Mr Donohoe described the Budget measures unveiled by both ministers on Tuesday as “fair”.

“The Budget showed very clearly that those who have the least get the most … in the round, this is a very, very fair Budget,” he said.

They made the remarks after Tánaiste Leo Varadkar said the Government will reassess the country’s financial situation in the new year to see whether it needs to intervene again to help people.

But he said he did not envisage a mini-budget being implemented.

He described the Budget as a “dynamic response to a unpredictable and rapidly unfolding situation”.

“Ultimately this Budget is about helping people with the cost of living, reducing the amount of tax you pay, increasing welfare payments and pensions, more money in people’s pockets and reducing some costs that are very high in Ireland, like childcare or public transport or the cost of putting children through college,” Mr Varadkar told RTE’s Morning Ireland programme.

“It’s also very much about helping businesses with energy costs too.

“The way it works is that the one-off payments fall between now and Christmas. The energy discounts are before and after Christmas and the increases in the weekly rates happen in the new year.

“So essentially we’re frontloading the Budget so that people are getting more up-front. You then see permanent increases in payments, pensions, welfare and permanent decreases in income tax in the new year.

“But we will have to see where we are in January, February.”

The Government’s €11bn budget package comprises €6.9bn in budgetary measures for next year, as well as a €4.1bn package of one-off measures to help tackle the rising cost of living for individuals, families and households.

In one of the State's most significant budgets in years, the pressure has been on the coalition Government to get the balance right as bills for energy, fuel, groceries and housing soar.

Mr Donohoe said a windfall tax or surplus will be used to fund any further cost-of-living measures that may be needed to help people struggling to pay energy bills.

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