Alarm bells for Fianna Fáil over 'rainy day fund' concerns

It has been proposed to put up to €3bn aside for any downturn

Alarm bells for Fianna Fáil over 'rainy day fund' concerns

Finance Minister Paschal Donohoe at an ECOFIN Council meeting in Luxembourg | Image: © European Union

Fianna Fáil has written to Finance Minister Paschal Donohoe, warning him about possible changes to plans for a 'rainy day fund'.

It comes after suggestions that the minister scale back his predecessor's plans and spend the money on big-ticket items instead.

The country is due to balance its books again from next year - Enda Kenny and Michael Noonan had proposed to then start putting up to €3bn aside in a 'rainy day fund' in case of another downturn.

But it is reported that the fund might not be so big, and some of the cash could be diverted to big projects like the long-awaited Metro North.

Health Minister Simon Harris says there is a need to invest in big-ticket items like that.

"I think there's a range of demands both in infrastructure and indeed in social infrastructure as well - when you've come through such a difficult decade in this country where capital spending was depleted to such a large degree.

"Clearly there is a need to accelerate that spending".

But it has sounded alarm bells for Fianna Fáil, as the 'rainy day fund' was part of their confidence and supply deal to support Fine Gael's Government.

Fianna Fáil finance spokesman Michael McGrath says the fund cannot just be left with a token contribution.

"We'll have to see how the final numbers fall - but from a Fianna Fáil point of view, the amount of money going into a rainy day fund from 2019 onwards has to be tangible and meaningful".

Finance Minister Paschal Donohoe is in Brussels and not available for comment - but he is likely to spell out his plans in a Summer Economic Statement on Wednesday.