The legislature’s Finance Committee yesterday approved a revised version of the Cabinet-proposed amendment to the Public Debt Act (公共債務法) after the Ministry of Finance agreed to increase the debt capacity of local governments.
Under the revised amendment, the overall debt limit for central and local governments would remain at 50 percent of the average GDP of the previous three years.
However, the central government’s debt ceiling was lowered to 40.7 percent of the average GDP of the preceding three years from the 41.2 percent in the amendment’s original version. In addition, the debt ceiling for the six special municipalities and counties would be increased by 0.4 percentage points and 0.1 percentage points respectively from the original version’s stipulations to 7.65 percent and 1.53 percent, with the debt limit for townships to stay unchanged at 0.12 percent.
The increase for the municipalities and counties would be achieved from the 0.5 percentage points yielded by the central government.
“The result could be seen as a kind of compromise between all parties, instead of concessions being made only by the Ministry of Finance,” Minister of Finance Chang Sheng-ford (張盛和) told reporters after the committee passed the draft amendment.
Prior to the committee reaching its conclusion, representatives from county governments yesterday requested that the ministry redistribute the debt capacity, saying they would have nearly no capacity to incur debt for public projects under the proposed draft.
Following several rounds of discussions with lawmakers and a meeting with Premier Sean Chen (陳冲) at noon yesterday, Chang agreed to lower the central government’s debt limit by 0.1 percentage points of the average GDP of the previous three years and translate the quota to county governments.
This latest concession came after the ministry agreed on Dec. 13 to lower its debt ceiling by 0.4 percentage points and redistribute the amount to the Taipei City Government’s debt capacity.
According to the Cabinet’s original proposal, Taipei’s debt capacity would have to be cut by more than NT$200 billion (U$6.78 billion), which would be redistributed to the other special municipalities: New Taipei City (新北市), Greater Taichung, Greater Tainan and Greater Kaohsiung, as well as Taoyuan, which is expected to be upgraded to a special municipality in 2014. However, under the revised version, Taipei will see its debt capacity cut by about NT$140 billion.
Meanwhile, the ministry yesterday also agreed to raise the debt ceiling for the nation’s special municipalities to 20 percent of their annual expenditure from the current 15 percent for a maximum period of five years to finance public works projects.
Chinese Nationalist Party (KMT) Legislator Alex Fai (費鴻泰), the committee’s convener, said the revised version of the amendment upholds the the three principles set by the committee to not raise the overall debt limit, to transfer some debt capacity from the central government to local governments and to strengthen the management of national debt.