Minister of Finance Lee Sush-der (李述德) said yesterday that the level of public borrowing and government debt as a ratio of GDP will gradually decline in line with a mandatory debt-repayment mechanism.
Lee made the remark in response to questions from Chinese Nationalist Party (KMT) Legislator Sun Ta-chien (孫大千) during a committee hearing on the allocation of a special budget on post-Typhoon Morakot reconstruction work through 2012.
Sun voiced grave concerns about the government’s finances, saying government debt would reach about 37 percent of GDP by the end of next year, approaching the legal limit.
Sun asked Lee if the government had any measures to improve its finances and repay its snowballing debt.
Drastic measures are necessary at a drastic time to address thorny issues, Lee said, but government borrowing was not necessarily inappropriate if used to boost national development.
Lee said government borrowing would be reduced every year from 2016, in conjunction with a middle and long-term debt repayment project. The level of debt as a percentage of GDP would also be reduced, he said.
Council for Economic Planning and Development officials said late last month that government debt would account for 40.1 percent of GDP for the current fiscal year, up from 35.5 percent last year and 34 percent in 2007.
The debt growth was due to infrastructure damage caused by several typhoons — including Morakot — and the global economic downturn, council officials said.
They said that although the ratio is much lower than the average of 91.6 percent of Organization for Economic Cooperation and Development members, the government should not underestimate the situation since it has posted a deficit for three straight years.
The deficit for the current fiscal year is equal to 4 percent of GDP, up from 0.9 percent last year and 0.4 percent in 2007, the officials said.
Meanwhile, the latest Ministry of Finance statistics showed that the government’s debts totaled NT$3.887 trillion (US$120.3 billion) as of the end of August.
Since President Ma Ying-jeou (馬英九) took office in May last year, the government has borrowed NT$222.5 billion to finance stimulus measures to boost economic growth due to the global financial crisis, the ministry said.
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