Due to these extraordinary challenges, Government borrowing will continue at a similar level next year before gradual decreases.
“We have never experienced a challenge like this, but equally Ireland has never delivered such a strong response,” Mr Donohoe said as he made his budget speech to the Dáil at the Convention Centre in Dublin.
He said the €17.75 billion package is “unprecedented in both size and scale in the history of the Irish State".
The budget was designed on the presumption of the continuing presence of Covid-19 and the absence of a vaccine.
Mr Donohoe said 320,000 jobs are expected to be lost this year, adding that 155,000 new positions will be created in 2021.
"While the uncertainty about the future of lives and livelihoods is great, we will prevail and build a stronger Ireland," Mr Donohoe said. "Budget 2021 is a bridge to that future."
Mr Donohoe said protecting employment and increasing our public health care capacity was the priority, adding that this budget was designed exclusively for the remainder of 2020 and next year.
The "cornerstone" of the Government's budget is a €3.4 billion recovery fund, in response to Covid-19 and Brexit, along with a €1.6 billion spend on capital programmes.
Key points
The wage subsidy scheme supporting businesses will continue in a slightly altered form beyond next March, while businesses will be able to claim a weekly payment of €5,000 while closed due to Government Covid-19 restrictions.
Spending to support the economy will lead to a predicted deficit of €20.5 billion next year, this is down €1 billion from this year.
The hospitality sector will be supported with a VAT reduction from 13.5 to nine per cent.
Carbon tax will be increased to €33.50 per tonne, up from €26, and continue to increase each year until it hits €100 per tonne.
Meanwhile, cigarettes will increase by 50 cent to an average of €14 per packet.
A third motor tax band will be introduced from next January.
Mr Donohoe's speech was followed by Minister for Public Expenditure and Reform Michael McGrath.
Mr McGrath announced that an extra €4 million would be allocated to the Department of Health. He also announced €110 million to be spent on affordable housing and cost rental schemes in 2021.
He revealed that the total exchequer investment in capital will rise above €10 billion for the first time ever.
Among other measures, Mr McGrath also announced increased funding for higher education students, mental health supports, the Department of Justice and the arts industry.
