Ireland set out plans to transform one of Europe's rare budget surpluses into a sovereign fund expected to grow to around €100 billion ($106 billion) over the next 12 years to protect the economy from future downturns.
Finance Minister Michael McGrath said 0.8% of gross domestic product, or about €4.3 billion, will be invested each year from 2024 to 2035 to take advantage of the corporate tax receipts from major multinationals based in the country.
A second fund will see contributions of €2 billion annually through 2030 to support infrastructure and climate-related projects, he said before parliament on Oct. 10 as he detailed the budget for next year.
"We have a window of opportunity now that we must grasp," McGrath told the Dail. "Budget 2024 marks a step change in how we plan for the future, by putting in place a long-term plan that will make the economic future safer for all."
The government wants to make use of a surge in corporate tax receipts from companies such as Apple, Microsoft and Pfizer with key European bases in Ireland to cover future costs such as an aging population and climate change.
The Future Ireland Fund has the potential to grow to more than €100 billion by 2035, McGrath said, adding that it can be used by future governments to "help protect living standards and public services."
The government predicts a budget surplus of €8.8 billion, or 3% of national output, this year. Windfall corporation tax receipts are expected to total €10 billion to €12 billion.
Yet recent figures indicating a decline in such revenue along with a worsening global economic environment have heaped pressure on McGrath and Minister for Public Expenditure Paschal Donohoe to be cautious on spending and avoid stoking price increases.
Ireland has seen persistently high inflation. The Department of Finance forecasts an average rate of just over 5% for 2023, slowing to 2.9% next year.
"I am acutely aware that household budgets are stretched for many individuals and families," McGrath said. "That is why we are providing assistance in this budget, with an emphasis on those who need it the most."