There has been mixed reaction to confirmation of a new €1.5 billion “rainy day” fund to help offset future shocks to the economy.

Minister for Finance Pascal Donohoe confirmed details of the long anticipated fund as part of Budget 2019 on Tuesday.

Initial financing is to come from the Ireland Strategic Investment Fund (ISIF), an €8 billion fund that operates under the umbrella of the National Treasury Management Agency. The rainy day fund will be supplemented with an annual €500 million from the Exchequer, starting in 2019, Mr Donohoe said.

Announcing the measure in the Dáil, Mr Donohoe said the State’s ability “to withstand economic shocks in the future needs to be rebuilt”.

Fianna Fáil finance spokesman Michael McGrath welcomed the fund, saying it would serve as an important fiscal buffer.

“Some future minister for finance in a future government will be glad this initiative was taken because it might allow our country to avoid the type of tax increases and spending cuts that had to be implemented when the last crisis struck,” said Mr McGrath.

“We need to protect ourselves in the event of a fiscal shock. Against the backdrop of a balanced general government budget, the establishment of this fund is an important reform and one we fully support,” he added.

Elsewhere, Annette Hughes, an economist and director of EY-DKM, said while the announcement and funding commitments were welcome, she said it was “a missed opportunity to bank corporation tax receipts.”

Irish Congress of Trade Unions general secretary Patrica King said the funds put aside for the fund “should be putting a roof over the head of homeless families.”