March 12, 2020 / 11:15 AM / in 20 days

Coronavirus could push Ireland into budget deficit, minister says

FILE PHOTO: Irish Finance Minister Paschal Donohoe walks outside Government Buildings in Dublin, Ireland October 8, 2019. REUTERS/Lorraine O'Sullivan

DUBLIN (Reuters) - The 3 billion euros (2.6 billion pounds) Ireland set aside this week to tackle the coronavirus will use up the budget surplus forecast for 2020, 0.7% of gross domestic product, and could tip the exchequer back into deficit, its finance minister said on Thursday.

Ireland confirmed its first coronavirus on Wednesday as the number of confirmed cases rose to 43 from 34 a day earlier.

Although Ireland is in the early stages of the outbreak, the government announced the funding package on Monday to boost the health service, workers’ sick pay and offer liquidity assistance to businesses affected by the virus.

“It is the case that the kind of surplus that we are now on track to deliver for 2020 - all of that is now going to be used, and potentially more, to help us to respond back to this public health challenge,” Paschal Donohoe told Clare FM radio.

“They (the public finances) will be compromised by this, but the whole point of having a surplus in the first place is then using that surplus when you need it.”

Data last week showed Ireland’s economy probably grew faster than any other in Europe again last year, having recovered from the financial crisis a decade ago. That pushed the public finances into surplus back into surplus in 2019.

Donohoe said fighting the coronavirus was not how he anticipated using the surplus. He had consistently warned that it would be needed to cushion the blow from a forecast decline in corporate tax receipts from 2022 as new global rules are introduced on how and where big internet companies pay tax.

Reporting by Padraic Halpin; editing by Larry King

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