In a policy reversal, the Ministry of Finance agreed last night to issue government bonds to raise all funds for rebuilding areas hit by Typhoon Morakot, ditching a plan to sell shares in state-run Land Bank of Taiwan (土地銀行).
Deputy Minister of Finance Tseng Ming-chung (曾銘宗) said last night that the ministry decided to comply with the legislature’s resolution on the matter.
The legislature green-lighted the special spending program, but attached a requirement that raised the budget ceiling to NT$120 billion (US$3.65 billion) from the proposed NT$100 billion and banned the Cabinet from selling stocks in banks with a government stake.
“The finance ministry will respect the legislature and finance all relief and reconstruction costs by issuing public debt,” Tseng told an unscheduled media briefing.
The public offering would have lowered the amount of debt the government needed to sell to cover reconstruction costs, Tseng said.
The government had aimed to raise at least NT$39.6 billion from the share sale, using the money to fund relief efforts after the typhoon demolished roads and bridges and buried villages between Aug. 6 and Aug. 9.
At least 461 people died in the disaster, with the destruction prompting the Cabinet to approve a reconstruction budget last week.
But bank employees protested the proposed sale and managed to win sympathy from lawmakers across party lines.
The policy change is expected to push the national debt up by 0.95 percent to NT$4.27 trillion, or 33.82 percent of GNP over the previous three years, Tseng said.
After factoring in the fiscal budget next year, however, the total debt would rise to NT$4.67 trillion next year, or 36.8 percent of GNP, inching closer to the ceiling of 40 percent as provided for by public debt regulations.
Tseng insisted the nation’s finances were under control, adding that governments in Japan, France and Singapore borrow much more money to sponsor public construction works and spur economic growth.
The deputy minister, however, would not rule out selling stocks in government-owned lenders in the future.
Such sales could be favorable to banks in terms of future development and accounting credibility, he said.
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