UPDATE 1-Ireland sees budget surplus soaring to 6.3% of national income by 2026

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Inflation forecast to fall to 4.9% in 2023, 2.5% in 2024

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Domestic economy to grow by 2.1% in 2023, 2.5% in 2024

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Work at "advanced stage" on setting up new reserve fund

(Adds quotes, details) By Padraic Halpin DUBLIN, April 18 (Reuters) -

Ireland's budget surplus is forecast to more than double to 6.3% of gross national income by 2026, the finance ministry forecast on Tuesday, handing the government significant resources to set up a planned new pension fund.

The finance ministry also expects inflation to slow to 4.9% this year and again to 2.5% next year, while the economy will grow by a faster-than-expected 2.1% in 2023 and 2.5% in 2024 after remaining "remarkably resilient" in recent months, it added. Ireland was one of the few euro zone countries to record a budget surplus last year - confirmed on Tuesday at 3% of gross national income - and the finance ministry expects that to grow to 3.5% this year, 5.4% next year and as high as 6.3% in 2026. That adds up to 65 billion euros over four years - which would have been enough to run the country a few years ago - and Finance Minister Michael McGrath has already pledged to set up a new actively managed fund to put surplus funds aside to meet longer-term costs such as pensions and heathcare spending. "We have to make very good use of the sweet spot that we are now in, in relation to the public finance," McGrath said in a statement, citing "serious" challenges ahead including an ageing population, risks to the sustainability of corporate tax receipts, de-carbonisation and digitalisation.

Having more than doubled in the space of two years to 22.6 billion euros last year, corporate tax receipts - mostly paid by Ireland's large hub of big multinational companies - are set to rise to 24 billion euros this year and 27 billion in 2026.

The finance ministry said public finances would still be in deficit this year without the "windfall" corporate receipts and that next year's surplus would be 4.4 billion euros and not the projected 16.2 billion euros without them.

While headline inflation is on a firm downward trajectory, core inflation, which strips out unprocessed food and energy, is expected to average a "more problematic" 4.4% this year and 3.2% in 2024, finance ministry chief economist John McCarthy said. ($1 = 0.9133 euros) (Reporting by Padraic Halpin; Editing by Alexander Smith and Andrea Ricci)