Taiwan may not be able to reach its economic growth target this year due to high oil prices and a weak stock market, Minister of Finance Lin Chuan (林全) told reporters during a visit to South Korea.
Lin is attending a two-day meeting of Asia-Pacific Economic Cooperation forum finance ministers on the southern South Korean island of Jeju.
"Our official [gross domestic product] estimation is 3.65 percent. However, the target may not be reached," Lin told Dow Jones Newswires late Wednesday.
"If oil prices increase for a long time, we have to inspect what kind of policy we will adopt but at this moment, we will carefully watch this change," Lin said.
Surging oil prices cast a long shadow over the 21-member APEC Finance Ministers' meeting on the themes of "free and stable movement of capital" and "the challenges of aging economies."
The ministers or their deputies will also address concerns over the sizzling US property market, which, if the bubble bursts, would seriously hamper the growth potential of the global economy, according to those attending the annual meeting.
Lin also said Taiwan expects to post a budget deficit next year of about NT$190 billion (US$5.8 billion), compared with about NT$270 billion this year.
Next year will be the seventh year in a row Taiwan records a budget deficit.
"We have already reduced our budget deficit a lot. For the last two years, we generated more tax revenues than before so tax reform is very important for us," Lin said.
Lin said the government aims to balance its budget by 2010, but must address its high rate of borrowing, he said.
"We also have to set up some system to pay for more incentives to generate local tax revenue, instead of asking for more grants from the central government," Lin said.
"Each year the budget deficit is around 3 percent of GDP, which is very high compared to other countries," Lin said.
"We have to do a lot of structural work so we can get rid of the budget deficit which has existed for a long time," Lin said.
Taiwan is working to enlarge its tax base and reduce some of the system's waivers and benefits that now apply to certain companies and individuals, he said.