The Government may have to reassess its capital spending priorities in the wake of the Covid-19 economic crisis, according to one of the state's top civil servants.

Speaking during a webinar organised by PWC, the Secretary General of the Department of Public Expenditure and Reform, Robert Watt, defended the Government's response in increasing borrowing to deliver supports such as the Pandemic Unemployment Payment, the Temporary Wage Subsidy Scheme and other schemes for businesses.

He said the state had the capacity to borrow this year and next year from the markets to fund various supports.

However, he warned that there would be huge issues in implementing a stimulus to infrastructure.

He noted that the Government was already a few years into the Project 2040 capital plan but said elements of that might need to be reassessed.

"The question now is are all those projects relevant, are they the same, or are there different needs," he said.

He said factors like people spending more time working from rather than commuting to work would raise fundamental questions in relation to transport and mobility patterns.

He warned that in turn could impact on the demand for public transport systems in towns and cities, as well as broadband access for working from home.

He raised the prospect that the incoming government could have to stand back and figure out what the priorities are now for capital and other areas of spending.

Mr. Watt said the immediate task was to figure out what a "stimulus-type capital infrastructure plan" looks like, including what would be the "appropriate" projects which the country actually needs.

He forecast that the state would play a more significant role in the lives of citizens for the next number of years, including through income support, infrastructure and delivering public health in a different way.

He said that would create issues including how the state was funded and its capacity to deliver services. Mr. Watt stressed that the current coronavirus crisis involving a "very quick, sharp downturn" was very different from the financial crisis of 2008 - and would require different policy instruments to boost recovery.

He said it would be important to plan for various scenarios, including optimistic ones.

He noted that during the financial crisis, the government had underestimated the capacity of the Irish economy to recover rapidly from the global financial crash, resulting in infrastructure deficits in areas like housing .

"Nobody expected the demand for housing to recover so quickly so I think policy mistakes were certainly made in not anticipating a robust recovery - and that's probably the biggest regret ultimately that we have," he said.