The Government will take a "prudent" approach in next week's Budget despite a forecasted €4.4 billion spending surplus next year, the Taoiseach said last night.
Mr Ahern indicated a generous spending package after new figures showed the Government will have €2.7 billion more than expected at its disposal.
The dramatic improvement in the financial forecasts for next year is due to increasing optimism about tax revenues.
Mr Ahern told Fianna Fáil supporters at a party dinner last night that the Minister for Finance was finalising his budget - to be delivered on Wednesday - against a stronger than expected background.
Among the measures expected to be announced next week is a €130 million-plus package aimed at elderly voters including an increase in the old-age pension to €208 a week. The Progressive Democrats are also pushing for a 1 per cent reduction in the top rate of tax from 42 per cent at a cost of €228 million a year.
But the Taoiseach simultaneously dampened expectations of a pre-election spending splurge.
The Government "will stick to the right course of prudent investment for Ireland's future" which is "yielding real results", Mr Ahern told the annual Cáirde Fáil dinner attended by 2,000 party members.
The Estimates of Receipts and Expenditure for 2007 - known as the pre-Budget White Paper - indicate that the Government will have a surplus of income over expenditure of €4.4 billion next year. However, this figure will fall when the additional spending measures to be announced in next week's Budget are factored in.
The figure in the White Paper contrasts with the previous Government forecast - made in October - which predicted a surplus of just €720 million.