Vice President Annette Lu (
Lu said the offer of aid -- made during President Chen Shui-bian's (陳水扁) trip to Paraguay this past weekend -- was for all of Taiwan's allies in the Caribbean and Latin America, and not just for Paraguay.
She also denied that Taiwan was using financial aid to try to win favor in the impoverished region over China.
"We've halted dollar diplomacy" since Chen took power in 2000, Lu said. "All we did was to help with people's livelihood ... by building villages, roads and parks."
Several local Chinese-language newspapers yesterday reprinted headlines carried by newspapers in Asuncion calling Chen "Santa Claus" for his offer of aid.
Paraguay is among Taiwan's 25 diplomatic allies.
The government has used loans and assistance to prevent its small pool of allies from being lured away by Beijing. But Taiwanese have increasingly questioned the effect of dollar diplomacy, noting reported misuse of the loans and grants by the receiving countries.
The China Times reported from Asuncion that 63 opposition congressmen boycotted Chen's speech at the Paraguayan parliament, complaining they had been barred from supervising the use of Taiwan's aid.
Lu said the US$250 million would be used to match Taiwanese investment in Central and South America, encouraging businesses to invest there instead of China.