Minister for Finance Paschal Donohoe has said that there is a possibility that Ireland will run a deficit of €30 billion this year.
"We expect public debt to increase significantly this year," the Minister said.
Speaking in the Dáil, Paschal Donohoe said the deficit can be financed at low interest rates at the moment but he said sentiment towards countries can change.
Minister Donohoe also told the Dáil that around 1.25 million people are now in receipt of income support from the State due to Covid-19, which he said is unsustainable in the long term.
Some €13 billion has been invested by the Government to support the economy but he warned there will be constraints on this spending in the future.
He said the change in the national finances is beginning to have a sharp effect.
Minister Donohoe said it was right for the Government to run a deficit when the private sector had experienced a demand shock of this magnitude.
He said the national income of the country will fall by 10.5% this year and it is expected that 220,000 jobs will be lost.
The Minister said the economic turmoil was as a result of a health crisis and not an economic crisis.
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He also said the Government was still examining if there is a way of changing the rules around the Wage Subsidy Payment to allow women returning from maternity leave to become eligible for the scheme.
The Minister said it was always intended that the payment would treat all citizens equally.
Responding to Fianna Fáil's Finance spokesperson Michael McGrath, the Minister said discussions are taking place between the Department of Finance and the Revenue Commissioners on the matter.
Sinn Féin's David Cullinane has said it is "unacceptable, discriminatory" that women returning from maternity leave are excluded from the Wage Subsidy Scheme.
Deputy Cullinane said the wage subsidy was increased from 70% to 85% for a group of employees - despite "the clear" provisions in the legislation.
He asked why the same mechanism cannot be used to instruct Revenue to deal with the issue of women on maternity leave and said the issue needs to be sorted.
Responding, Minister Donohoe said it was because of the legislation that he made the change that he did to the Wage Subsidy Scheme.
He said the decision that he made then did not change the eligibility criteria for the scheme and the numbers that could access the scheme.
Latest coronavirus stories
Several ministers were facing questions from the Opposition today over the Government's handling of the Covid-19 crisis.
The cancellation of the Leaving Certificate and the failure to deliver childcare for frontline health workers this week were to be the focus for many TDs in the Dáil when Minister for Education Joe McHugh and Minister for Children Katherine Zappone were answering questions.
Negotiations on a programme for government will also take place.
Significant progress was made yesterday on housing with a broad agreement in principle now in place for several initiatives.
These are understood to include the building of social and affordable homes on public lands.
There was also a discussion on climate action where the ambition to reduce greenhouse gas emissions by 7% annually was restated.
Detailed talks on this key point will take place later in the week and it will encompass several government departments.
The parties are set to discuss policy priorities for the Irish Language, foreign affairs and agriculture today.
Additional reporting Mícheál Lehane