The Ministry of Finance said on Monday that the per capita debt burden in Taiwan had been reduced over the past two months.
In a bid to help assuage public fears over the impact of Standard & Poor’s decision late last week to downgrade the US’ credit rating, the ministry released its latest national debt figures, which showed a decline in the amount of short-term debt.
At the end of last month, the central government’s outstanding debt with maturity one year or longer amounted to NT$4.5955 trillion (US$159 billion), while short-term debt had reached NT$148.8 billion.
The figures translated into a per capita debt burden of NT$205,000, down slightly from NT$207,000 in June and NT$211,000 in May.
Ministry officials said that in addition to interest payments, it has recently made an additional principal repayment of NT$10 billion and is expected to pay out more in the near future given increased tax revenues in June and last month. They did not elaborate.
In a press statement released on Sunday, the ministry ruled out the possibility of a debt crisis for Taiwan because the country has no external debt — one of the root causes of the crises in some European countries and the US.
“Taiwan’s financial status is very healthy compared with other countries,” the statement said.
Under the Public Debt Act (公共債務法), the ratio of combined annual deficit for the central and local governments should not exceed 15 percent of government expenditures, and the central government’s gross debt should not go beyond 40 percent of GNP for the preceding three years, while local government debt as a whole should be under 8 percent of average GNP.
The ministry said that at the end of June, central and local governments’ outstanding debt reached 39.22 percent of the nominal three-year GNP, which was well below the combined 48 percent ceiling set by the act.
Looking at the figures for some other counties, the debt ratio was more than 60 percent of GDP for Portugal, Ireland, Spain and Greece, and 91 percent and 220 percent for the US and Japan, respectively.
In terms of government deficit, Taiwan stood at only 2.4 percent of GDP, lower than the 3 percent or more recorded by most EU countries, it added.
The ministry said that to help push forward a sustainable national development policy, it had adopted a series of measures to contain the country’s debt problems and increase revenues.
For example, the ministry added, it has decided to use 7.5 percent of projected tax revenues, or NT$94 billion, to repay the debt principal next year, which will be NT$28 billion more, or 42 percent higher, than this year.