Cabinet admits to a deficit-reduction plan after report

The Cabinet is planning to cut the government's spending budget for next year by between 0.5 percent and 1 percent in a bid to narrow the deficit, a Cabinet official said yesterday. This will translate into savings between NT$8.2 billion and NT$16 billion.

Lin Yao-wen (林耀文), chief secretary of Premier Frank Hsieh's (謝長廷) office, confirmed a Chinese-language newspaper report yesterday that the Cabinet is trying to keep government spending below NT$1.6 trillion (US$50.5 billion) next year.

The affected expenditures will include personnel expenses and administrative spending among various government agencies, Lin said, without elaborating.

The government last year proposed a total expenditure of NT$1.6083 trillion for fiscal 2005, and the figure actually increased to NT$1.6356 trillion, up 2.4 percent, due to the addition of NT$23.5 billion in compensation for agricultural damage and other special tech-development spending, according to the Cabinet's data.

For fiscal 2006, the Cabinet originally proposed an estimated budget of NT$1.6001 trillion. But Hsieh wasn't satisfied with the target, and last Wednesday asked the Directorate General of Budget, Accounting and Statistics (DGBAS) to bring government expenditures to under the NT$1.6 trillion level, a goal that DGBAS Director-General Hsu Jan-yau (許璋瑤) said would be "very challenging" to achieve, according to the newspaper report.

As for the annual revenue, the nation's top number crunchers have retained a target of NT$1.4027 trillion for fiscal 2006, which will leave the year's annual deficit at NT$197.4 billion.

So far, the DGBAS estimates the central government's budget deficit will increase to NT$337.3 billion this year, from an estimated NT$304 billion last year. The government has been running a deficit for a decade, with a shortfall of some NT$5.1 billion in 1990.

Minister of Finance Lin Chuan (林全) has said the government hopes to balance the budget in five to 10 years.