Irish finance minister plans contingency fund if re-elected - report

DUBLIN (Reuters) - Ireland's senior coalition party would build up a contingency fund as a buffer against fiscal shocks if it remains in power after elections expected to be held next month, Finance Minister Michael Noonan was quoted as saying on Friday.

Fine Gael's Noonan said the next government will have about 10 billion euros of extra money available over the next five years, based on current economic growth forecasts, spending commitments and demographic pressures, and he would leave a quarter of that in a 'Contingency and Stability Reserve.'

"If there is a shock, externally or internally, we'll have a contingency fund which we will deploy," Noonan was quoted as saying in an interview with the Irish Independent newspaper.

Irish Prime Minister Enda Kenny will likely name the date of an election next week and is expected to opt for late February.

Noonan said that if there was no shock and the economy was running strongly he would be prepared, if he was finance minister, to allocate the money to investment in infrastructure.

With Ireland's fast-recovering economy putting pressure on infrastructure and services, Noonan said last week that he would favour increasing spending at more than twice the rate of tax cuts in the next term of office.

Fine Gael's main opponents Fianna Fail has said it would set up a similar fund that would set aside any windfall gains from unexpected revenues, although Noonan argued that European Union rules would not allow such revenues to be spent anyway.

Before the financial crisis, Ireland built up a 24 billion euro fund to address a future pensions time bomb, but instead had to funnel the majority of the savings into its banks as part of a 2010 international bailout.

(Reporting by Padraic Halpin; Editing by Hugh Lawson)