Tánaiste Leo Varadkar has indicated that border counties could move to level 4 restrictions as the situation north of the border worsens.
Speaking before Northern Ireland confirmed the introduction of restrictions, the Tánaiste said the government will monitor the decisions taken by Stormont.
The North is seeing higher numbers than the Republic in recent weeks and it has been suggested that Donegal, Cavan and Monaghan would need to undergo a similar increase.
He said: "What we'll do is we'll hear what happens in Northern Ireland this morning and we will respond to that. We will see if we need to respond to a particular situation with relation to the border counties, then Nphet will meet on Thursday and we'll consider their advice in the days after that and make decisions at that point.
"The other main reasons to why restrictions might be tightened in the border counties is not just what's happening in the North, its the incidence in those counties, which is the highest in the country, particularly Donegal, Cavan and Monaghan."
Mr Varadkar said that it was possible schools in the border counties would remain open, saying that they had been a "safe environment".
Mr Varadkar said that he didn't "want to go over old ground" when asked if he was wrong when he said that Nphet advice to go to Level 5 last week was wrong.
In terms of next year's Budget, 2021 will be a better year than 2020, Mr Varadkar says he believes.
Mr Varadkar told Morning Ireland that he was "an optimist" and believed that the Budget, which was predicated on a long-term Covid situation as well as a hard Brexit, would prove to be sufficient for the year.
"The truth is that a huge amount of money at the moment is being saved. Because people are just unable to spend it - people can't shop, can't go weekends away can't go to restaurants or things that they would otherwise like to do.
"When that money is released into the economy, we will see the economy bounce back, domestic demand will bounce back.
"And you know the budget is based on a very pessimistic scenario, the pandemic going on for the entire year and no vaccine, Brexit going wrong.
The Tánaiste accepted that the VAT cut for the hospitality sector was possibly too late.
He said that the Pandemic Unemployment Payment (PUP) and Employment Wage Subsidy Scheme (EWSS) could be extended beyond the deadline of 1 February if they are needed.
“If we end up doing anything, we may have to extend it beyond the Spring, than put up the rates” he said.
Mr Varadkar said the PUP had been extended and reformed already, and there was an unallocated provision in the budget that could be used to extend it further. The situation would be assessed and judged at that time (spring).
The PUP had been “a crude instrument” when first introduced, “it was supposed to be there for only 12 weeks”.
It had now been reformed to align it with people’s income.
Mr Varadkar also defended the Budget’s housing provision target, describing it as “hugely ambitious”.
He acknowledged that it would be hard to achieve and might need to be accelerated further.
If the country moved to Level 5 of the Living with Covid plan that would mean construction would have to cease and that would have an impact, he said.