The restoration of the Stormont powersharing institutions is crucial so Northern Ireland politicians can deal with budget pressures, the Government has said.
Secretary of State Chris Heaton-Harris will continue to engage with parties over coming weeks to attempt to end the political deadlock, a statement from the Northern Ireland Office said.
The NIO was responding to reports of a letter sent by the head of the civil service Jayne Brady to Mr Heaton-Harris which said Stormont departments have reached the limit of what they can do to manage budget pressures this year.
The powersharing institutions at Stormont have not been operational for 16 months as part of a DUP protest at post-Brexit trading arrangements.
Senior civil servants have been left running Stormont departments and face having to make substantial cuts following a budget set by Mr Heaton-Harris.
However, civil servants have limited powers and some of the cost-cutting measures they are facing would need ministerial decisions.
The BBC reported that Ms Brady had written to Mr Heaton-Harris last week advising that officials had reached the limit of the savings they could make.
A Northern Ireland Office spokesperson said acknowledged that Mr Heaton-Harris had received the letter and is “acutely aware of the challenges faced by departments and civil servants”.
The statement added: “Our focus remains on executive restoration and the Secretary of State will continue to engage with the parties over the coming weeks.
“While action has been taken to ensure governance can continue, including through setting two Northern Ireland budgets, this position is not sustainable.
“Executive restoration is crucial for local politicians to take strategic decisions on an affordable and deliverable Programme for Government.
“In the meantime, the Secretary of State will continue to engage with the Northern Ireland Civil Service on the management of departmental budgets for this financial year, and working on budget sustainability including the implementation of revenue raising measures.”