Fund further enhances resilience of the Irish economy and strengthens public finances
The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe. T.D., has today (Thursday) commenced the National Surplus (Reserve Fund for Exceptional Contingencies) Act 2019. This commencement establishes the National Surplus (Exceptional Contingencies) Reserve Fund, which is more commonly known as the ‘Rainy Day Fund’.
On the commencement of the Act today, Minister Donohoe said:
Note for Editors
The purpose of the Rainy Day Fund is to mitigate severe economic shocks, in excess of the normal fluctuations of the economic cycle. In view of the unpredictability of such events, the Act establishing the Fund does not set out specific events that would lead to its drawdown.
Drawdown of the Fund will be a decision for the Minister and Government of the day following an assessment by the Department of Finance. If the Government agrees to drawdown the Fund, then the Minister will seek a resolution of Dáil Eireann authorising drawdown of funds to the Exchequer.
This process ensures that Dáil Éireann will be fully involved in any future decisions regarding drawdown, and decisions on expenditure of the monies will be subject to voted expenditure procedures.
The in-year contingency reserve is intended for events which are not reasonably foreseeable, such as, for example, a recurrence of foot-and-mouth, or multiple severe weather events.
The Rainy Day Fund is intended to be used as a defined-purpose instrument to address severe, unanticipated events, as opposed to the normal fluctuations within the economic cycle. This approach would align it with the current EU fiscal rules framework under the existing Stability and Growth Pact provisions