The Minister for Finance Michael Noonan has said the government is likely to have at least €400m more than expected to fund spending increases and tax cuts at its 2017 budget. 

The Department of Finance estimates that the country will have €900m of net "Fiscal Space" in preparing its 2017 budget.

This is up from a forecast of €500m made last year, Mr Noonan told the Dáil today. 

The figure may be revised upward in the coming months, the Minister added.

Speaking in the Dáil on the Stability Programme Update today, Mr Noonan stressed that the increase was not a policy change.

He noted that a future government would have the opportunity to "exceed the Medium Term Objective (MTO or Fiscal Space) if necessary". 

Therefore, he said a future Finance Minister can over-achieve the MTO and continue with zero as the definition of a balanced budget. 

The market reaction to the management of the public finances, according to the Minister, has resulted in the cost of borrowing nearing historic lows.

Irish bond yield movements, he said, are now trading in line with core European sovereign yields. In 2011, the yield on ten year Irish Government bonds reached 14%, but in 2016 it has steadied at below 1%.

The Minister noted external risks on the economy such as the possibility of a Brexit, and he said the chief internal risk is losing control of expenditure. 

The way to avoid that is "prudent management of the Government Finances", he added. 

He said there has been a dramatic improvement in Ireland's fiscal position, adding that the deficit is projected to be 1.1% this year and 0.4% next year. 

"We are in striking distance of a balanced budget," he said, adding that Ireland should exit its deficit by the summer.