The massive overrun in the budget for the new National Children's Hospital in Dublin is going to mean cut-backs in a number of government departments.

And it emerged today that one of the projects set to be hit is the upgrading of the A5 route from Derry to Aughnacloy.

This key route - which carries a considerable amount of traffic between north Donegal and the capital - is being developed jointly by the British and Irish governments.

However, RTE reported this morning that €27 million allocated for this year now looks set to be withheld.

The project has been the subject of some legal challenges and has been delayed.

Work is not expected to resume in earnest until later this year and the payment could be be held over.

The new National Children's Hosptial is now expected to cost €1.7 billion.

Ministers are being asked to find savings in their department’s budgets to make up for the €450m hospital project overrun which emerged before Christmas.

The saving sought from this year’s budget, which was agreed with Fianna Fail in October, will be in the region of €100m.

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