Paschal Donohoe says the new rainy day fund will act as an insurance policy for the economy.
Three billion euro will be put into the fund over the next three years, starting with €1.5bn from the State’s sovereign wealth fund, the Ireland Strategic Investment Fund (ISIF).
The first tranche of €500m will be added as part of Budget 2019 and the Government will endeavour to put aside around €8bn altogether in the medium term.
It is aimed at acting as a cushion for the economy in the event of another financial crash.
Finance Minister Paschal Donohoe says they have tried to find a middle ground between spending on services and saving money.
Mr Donohoe said: "I believe that strikes the right balance between making resources available to invest in the here and now and find other ways to strengthen our economy in the future while putting in place an insurance policy like this, while also trying to bring our deficit and our borrowing requirements to where they are now, which is broadly balanced.
"So it is the right balance overall."