The budget surplus is expected to balloon to more than €20bn in just three years, according to the Department of Finance.

A strong economy and a bulging tax take are set to drive the budget surplus into double-digit territory this year and beyond, the department said in an updated economic forecast.

The stability programme update (SPU) - a document that outlines spending, revenue and economic estimates for the next three years - says the budget surplus is estimated to surge to €10bn this year and to €16.2bn in 2024.

That figure is expected to rise again to 18.1bn in 2025 and to 20.8bn in 2026 – more than double what it was last year. The estimates assume no economic shocks between now and then.

Earlier today, the Central Statistics Office revised up its estimates for the 2022 surplus by around 50pc to €8bn on the back of a technical accounting measure.

“Irish economic data have surprised on the upside and the near-term outlook is somewhat better than anticipated,” the SPU document said.

“Despite the powerful headwinds faced over the past year, the Irish economy has proven to be remarkably resilient.”

However, the Department of Finance said that stripping out “windfall” or one-off tax receipts, the budget would be in a deficit this year of €1.8bn, rising to a surplus of just €4.4bn next year.

The Government estimates that around half of all corporation taxes are windfall receipts that could end abruptly in future.

The domestic economy is expected to grow by 2.1pc this year and 2.5pc in 2024, an upgrade to previous forecasts, supported by lower inflation and higher consumer spending. It is predicted to pick up to over 3pc in 2025 and 2026.

The figures for this year and next are below Central Bank predictions and much less optimistic than the recent forecast from the Economic and Social Research Institute, which expects the domestic economy to grow closer to 4pc this year and next, and possibly overheat.

The wider economy - in terms of gross domestic product, which includes all multinational transactions - is expected to grow by 5.6pc this year and 4.1pc in 2024, the Department of Finance said in the SPU.

Inflation is set to fall back to 4.9pc this year (from almost 8pc last year) and fall further to 2.5pc in 2024.

Record employment is expected to continue this year and next, with unemployment set to remain at a low of around 4.5pc for the next three years - which is essentially “full employment”.

Government debt is expected to fall from €224.8bn last year to €215bn by 2026, with the debt ratio falling from 83.3pc of modified gross national income (GNI*) to 65.4pc by 2026.

The department estimates that an extra €7-8bn per year will be needed to fund existing public services as the population grows and people age.

Finance Minister Michael McGrath is looking into putting windfall tax receipts aside in a new reserve fund, separate to the €6bn it has already set aside in its existing rainy day fund. That fund – known as the national reserve fund – is capped at €8bn.