Press release
Minister McGrath announces €4 billion transfer to the National Reserve Fund
Published on
Last updated on
Published on
Last updated on
The Minister for Finance, Michael McGrath, has today (Tuesday), announced the transfer of €4 billion from the Exchequer’s Central Fund into the National Reserve Fund (NRF).
Today’s transfer is the consequence of the Dáil’s approval of a motion brought by the Minister for Finance on Budget night, Tuesday, 27 September 2022.
The approach of capitalising the reserve fund is endorsed by the Department of Finance in its analysis entitled “De-Risking the Public Finances – Assessing Corporation Tax Receipts” published in September 2022. It is also supported by IFAC and all other institutions that provide economic advice to Government.
Today’s transfer means that €6 billion has now been transferred to the NRF. The decision to replenish and further bolster the Fund following the withdrawal of €1.5 billion from it in October 2020 towards the government’s pandemic response, improves the resilience of the public finances and allows the State to deal with future crises.
Commenting on the transfer, Minister McGrath said:
“On Budget day, the government committed to putting aside additional resources, from excess corporation tax receipts to prepare the public finances for future challenges. This commitment was made while also providing over €11 billion in economic support to households and businesses in Budget 2023 to help individuals, families and businesses deal with the rising cost of living.
"While we have acted to deal with this immediate challenge, there are future costs which we must be prepared for including the consequences of an ageing population, the digital transition and climate change. Recent history has taught us that we must also be prepared for unforeseen challenges, which are becoming more frequent and increasingly impactful.
"The transfer of €4 billion to the National Reserve Fund today is an important step in that preparation. Today’s transfer comes after the €2 billion transfer made in 2022 and brings total transfers to the Fund since Budget night 2022 to €6 billion. This means that the NRF will have a strengthened position to respond to the type of unforeseen challenges that the Fund was established to deal with in 2019."
The National Surplus (Reserve Fund for Exceptional Contingencies) Act 2019) which established the National Surplus (Exceptional Contingencies) Reserve Fund was commenced on 31 October 2019.
The Fund was subsequently seeded with a €1.5 billion transfer from the Ireland Strategic Investment Fund on 15 November 2019. Section 5(2) of the National Surplus (Reserve Fund for Exceptional Contingencies) Act 2019, required that the Minister for Finance shall, from the Central Fund or the growing produce thereof, pay €500,000,000 into the National Surplus (Exceptional Contingencies) Reserve Fund in each of the years, 2019, 2020, 2021, 2022 and 2023. No such transfers were made between 2019 and 2021.
Under Section 5(4) of the Act, in any given year, the Minister for Finance may make a proposal to the Dáil to approve the making of a payment of a specified sum from the Central Fund or the growing produce thereof into the Fund.
In response to the Minister’s proposal, Dáil Éireann may then pass a resolution authorising the Minister to pay the prescribed amount into the Fund for that year.
On Tuesday, 27 September 2022 the Dáil approved the Minister for Finance ’s motion under section 5(4) of the National Surplus (Reserve Fund for Exceptional Contingencies) Act 2019 to transfer to transfer €1.5 billion in 2022 and €3.5 billion in 2023 into the National Surplus (Exceptional Contingencies) Reserve Fund a.k.a. the ‘National Reserve Fund’.
This transfer is in line with a recommendation set out in the Department of Finance’s economic paper entitled “De-Risking the Public Finances – Assessing Corporation Tax Receipts” published in September 2022. Find the report here: De-Risking The Public Finances – Assessing Corporation Tax Receipts.
Today’s transfer means that the NRF, has now received transfers totalling €6 billion since Budget night 2022. The decision to replenish the Fund following the withdrawal of €1.5 billion from it in October 2020 towards the government’s pandemic response, improves the resilience of the public finances and allows the State to deal with future crisis and challenges.
As well as the amount approved under Section 5(4) above, Section 5(2) of the 2019 Act also provides for a transfer into the Fund of €500 million in both 2022 and 2023.
Following the Dáil’s approval the 2022 transfer of €2 billion (€1.5 billion plus €0.5 billion) to the NRF was made on 1 November 2022.
Subsequent to the Office of the Comptroller and Auditor General agreeing the necessary requisition for credit for €4 billion (€3.5 billion + €0.5 billion referred to above) to allow for the 2023 NRF transfer from the Exchequer’s Central Fund to the NRF.