The fund will be worth €100 million over two years and will provide direct financial support to "internationally trading enterprises".
Unemployment in Ireland hit 11% last month, forcing the government to scramble for initiatives to protect jobs by extending credit and financial support for SMEs. Finance Minister Brian Lenihan said it costs the state €21 million for every 1,000 people who lose their jobs.
Dr Aidan O'Boyle, chairman of the Small Firms Association (SFA), said it is more sensible to try to keep people in existing jobs rather than investing in retraining those who have become unemployed. He added the budget should restore confidence in the Irish economy by ending the uncertainty of recent months.
However, the SFA described the new Enterprise Stabilisation Fund as "paltry", adding that SMEs had been calling for a package of support measures worth €1 billion.
IPR tax break
Minister Lenihan also announced a new scheme for tax relief on "the acquisition of intangible assets, including intellectual property," although he said the details of the plan would be released later.
He said the move would attract high quality employment to Ireland. The Irish government last December introduced a series of new R&D tax credits as part of its 'Smart Economy' plan.
However, the research sector was hit with cuts of €13 million in capital spending on sustainable energy and energy research programmes, as well as a reduction of €2 million in the budget of Ireland's Strategic Innovation Fund.
The emergency budget was dominated by a series of tax increases necessary to plug the €5 billion deficit in Ireland's public finances. Income levies were increased, while the tax on cigarettes and diesel also rose. The existing support scheme for childcare will be phased out and a 'Christmas bonus' for social welfare recipients has been scrapped.
The Irish Small and Medium Enterprises Association (ISME) described the budget as "savage", and warned that the tax increases would hurt job creation.
"By increasing excise duties on diesel and increasing the insurance levy, the minister has failed to grasp the impact that higher business costs have had on SMEs, with many companies struggling to keep their heads above water in the face of rising costs," ISME said in a statement.
The group called on the government to tackle rising local taxes and energy costs, which it said were impeding small businesses.