Ireland may need limited access to the new European Union Covid-19 rescue package to help fund the wage subsidy scheme and help support companies in difficulty, Minister for Finance, Public Expenditure and Reform Paschal Donohoe has said.

Last night European Union finance ministers agreed a €500bn rescue package to combat the coronavirus pandemic following a breakthrough in negotiations. 

Speaking on RTÉ's Morning Ireland, Minister Donohoe said he is resolutely confident Ireland can create a new economy and create new services to recover and move forward, but added: "we have a journey ahead of us".

He said the new welfare supports will be monitored and may need to be strengthened to aid the recovery as 200,000 workers access the wage subsidy scheme.

Mr Donohoe said the deal reached with EU finance ministers last night has three different elements.

The first is to make loans available to countries in really big difficulty to help their healthcare ability to respond to Covid-19; secondly, there is a company plan - to use European Investment Bank to make money available to companies at low interest rates to respond to Covid-19; and a third plan for workers to help companies pay for wage subsidy schemes.

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He said it is very possible that Ireland will need to access funds from the European Investment Bank to help fund companies and will consider whether to access the programme to help fund wage subsidy schemes. 

It is hoped that it will not need to use the fund from the European Stability Mechanism, he added.

He said a new Government in Ireland must have a stable majority but must reflect the hopes and fears of the electorate when they voted.  

EU finance minsters agree Covid-19 rescue deal

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Meanwhile, a professor of economics at NUI Galway has said the €500bn rescue package agreed to help EU member states respond to the economic impact of the Coronavirus pandemic is a positive outcome, but the figure needed is likely to increase.

Alan Aherne told Morning Ireland that as it stands Ireland will not need to borrow from the European Stability Mechanism's new low-cost loan fund, as the European Central Banks keeps borrowing costs close to zero.

Mr Aherne said he is "cautiously optimistic" the recovery will be "much, much quicker than a usual recession" given the welfare supports that have been put in place.

He said the new credit and loans from the ESM attach light conditionality - meaning the funds must be used for Covid-19 health-related expenditure.

Mr Aherne said the €500bn fund is a "decent start" but that multiples of that figure may yet be needed to aid EU-wide recovery.

The package will be made up of low cost loans and credit lines, partly involving the EU's main bailout fund, but with further resources deployed by the European Commission and the European Investment Bank.

The breakthrough comes after finance ministers met a few hours ago, having failed to reach agreement in the early hours of yesterday morning.