Mon, Sep 16, 2013 - Page 13 News List

Ministry plans share sell to cover budget deficit

By Amy Su  /  Staff reporter

The Ministry of Finance (MOF) is scheduled to unveil a revenue-boosting package by the end of this year to reduce the nation’s budget deficit as Taiwan is likely to report a significant shortfall in tax revenue this year.

Among possible measures, selling government agencies’ shares of local companies that do not play a role in policymaking may be a priority, the ministry said.

That may include launching initial public offerings of those companies, the ministry said.

The ministry also hopes to squeeze some profits from revitalizing underutilized lands owned by government agencies.

Hiking taxes would be the last measure to be considered, Minister of Finance Chang Sheng-ford (張盛和) told a press conference on Thursday.

Currently, the government holds about NT$1.7 trillion (US$56.96 billion) worth of shares in local firms.

State-run financial service providers, such as Mega Financial Holding Co (兆豐金控) and Taiwan Cooperative Financial Holding Co (合庫金控), are now traded on the local bourse, while several other companies, in which the government holds shares worth a total of NT$1.2 trillion, are privately held.

The government may consider selling stocks of those companies that are not industry leaders, such as United Microelectronics Corp (UMC, 聯電) and Taiwan Land Development Corp (台灣土地開發), Chang said. However, the government will not divest shares of state-run companies carrying policy missions, such as Taiwan Financial Holding Co (台灣金控), Chang said.

DEVELOPMENT

Revitalizing state-owned lands would be another important measure under the ministry’s plan, Chang said, adding that the move could improve the nation’s finances in the long run.

The outstanding balance of the central government’s long-term debt amounts to 38.6 percent of the three-year average GDP from 2011 to this year, approaching the debt ceiling of 40.6 percent, the ministry data showed.

This indicated that the central government is only allowed to borrow NT$280 billion in the foreseeable future, according to the ministry’s statistics.

SHRINKING REVENUE

Tax revenue is also shrinking. Tax revenue dropped 1.1 percent annually in the first eight months of the year, increasing the odds of missing the government’s target of collecting NT$1.8637 trillion this year.

Those factors have left little leeway for the ministry to manage the nation’s finances.

Although the situation is difficult, the government is not likely to consider raising the debt ceiling, Chang said.

He added that stable income from economic growth of at least 2 percent annually and a reduction in annual borrowings to less than NT$100 billion would help stabilize the nation’s debt level.

“The [debt] problem is not as serious as some people previously thought,” Chang said.

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