Finance Minister Charlie McCreevy is expected to reveal further cutbacks later today when he announces the Government's spending estimates for next year.
Spending across most departments is expected to be severely curtailed due to the deteriorating state of the public finances.
Sean Fleming, the chairman of the Oireachtas finance committee, said there will be modest increases in the health and education budgets, with other departments expected to bear the brunt of the cutbacks.
Last year, Mr McCreevy was able to boast about the strength of the Irish economy, saying it was well placed to benefit from any international economic recovery.
At that time, he announced increased spending on roads, transport, housing, water, health and education. But in the intervening 12 months, inflation has remained steadily high and tax revenues have fallen sharply.
Minister McCreevy also pressed ahead with massive rises in Government spending, meaning a round of severe cutbacks is expected today in an effort to regain control of the situation.