State spending €5.5bn Covid contingency fund faster than expected

Impact of third wave much more onerous than had been expected by Government

The State is burning through its €5.5 billion in coronavirus contingency funding at a higher rate than anticipated, The Irish Times has learned.

A meeting of the Cabinet’s economic subcommittee, attended by senior Ministers and the Taoiseach this week, heard that the fund – comprising two separate reserves apportioned for at budget time last year – has been tapped earlier than expected, for greater amounts, and is likely to be needed for longer than anticipated.

While the State’s coffers are well stocked and borrowing is cheap, the current and anticipated call on the reserve funds illustrates the massive extent of interventions needed due to the current harsh lockdown, as well as the likely persistence of Level 5 restrictions for the foreseeable future, Government sources said.

Hospital Report

Budget 2021 was drawn up based on pessimistic assumptions around a no-deal Brexit and the unavailability of viable coronavirus vaccines – neither of which have come to pass, meaning the economic backdrop is somewhat better than anticipated. However, the enormous impact of the third coronavirus wave is much more onerous than had been planned for.


Economic costs

The budgetary “baseline scenario” was that the economy would co-exist with the virus, with phased restrictions ebbing and flowing but no full lockdown. It also assumed the economic costs of further lockdowns would be less severe.

Ministers at the meeting on Thursday also accepted that no firm date can be set down for ending the Pandemic Unemployment Payment, even though the number receiving the payment is lower than at the peak last year. There was uncertainty too about when the wider economy can reopen, although there is growing confidence within Government that construction can reopen relatively early. It was conceded that the most stricken sectors of hospitality, travel, tourism and the arts will remain moribund for some time.

“We can’t allow these sectors to disappear,” said one Minister. “We have to keep them on life support.”

Minister for Health Stephen Donnelly confirmed the first batches of the AstraZeneca vaccine will arrive in Ireland this weekend, with 43,000 doses expected over the next week.

“We expected 190,000 doses in total to arrive in February. They will be administered straight away,” Mr Donnelly told RTÉ. Studies have concluded that AstraZeneca is highly effective among people over 70, but Irish authorities have recommended the use of only the Pfizer and Moderna vaccines for that upper age cohort because of a lack of data until now on the efficacy of AstraZeneca among older people.

New cases

A total of 1,047 new cases of the virus were reported yesterday and 35 deaths. Some 1,221 people are currently in hospital with virus symptoms, of whom 181 are in ICU units.

Separately, Minister for Education Norma Foley has disclosed her department is planning for a combination of Leaving Certificate examinations and an alternative assessment option, not involving exams. No details have been disclosed of the nature of the assessment option but senior officials in education will now begin bilateral engagement with the relevant bodies.

The Garda will begin issuing €100 fines from next Monday to motorists from Northern Ireland who cross the Border without a reasonable excuse for travelling. The Health Act 1947 has been amended to include those not ordinarily resident in the State as being liable for the fines.

Jack Horgan-Jones

Jack Horgan-Jones

Jack Horgan-Jones is a Political Correspondent with The Irish Times

Harry McGee

Harry McGee

Harry McGee is a Political Correspondent with The Irish Times