The Cabinet approved a four-year, NT$500 billion (US$14.67 billion) special budget for a public works expansion program yesterday, part of its economic stimulus package.
With NT$150 billion to be allotted this year, the Cabinet said it expected the plan to contribute 0.97 percentage points to GDP and create 190,000 to 220,000 jobs this year, Council for Economic Planning and Development Chairman Chen Tain-jy (陳添枝) said.
The government will take out loans domestically to finance the entire stimulus plan.
Chen said the ratio of the country’s outstanding debt to GDP would increase by about 1 percentage point this year, which was “within tolerable limits.”
The Directorate General of Budget, Accounting and Statistics said Taiwan’s outstanding debt was 32.6 percent of GDP.
Under the stimulus plan, the government will spend NT$160.67 billion next year, NT$105.5 billion in 2011 and NT$83.6 billion in 2012.
“About NT$300 billion, or 62 percent, of the NT$500 billion will be spent in the first two years to help the economy weather the global financial tsunami,” Chen said.
The money will be used in 64 major programs aimed at achieving six goals: establishing sound and convenient transportation, elevating the level of culture and quality of life, establishing a safe, disaster-free environment, improving the infrastructure needed to boost competitiveness, improving transportation around outlaying islands, and educating research and development personnel as well as stabilizing employment and schooling.
Chen said the plan was focused on both hardware infrastructure and software development in the hope of “building a strong basis for industrial competitiveness.”
Government Information Office Minister Su Jun-pin (蘇俊賓) said later that the Executive Yuan would refer the budget request to the legislature for review before its new session begins next Friday.
Meanwhile, when asked to respond to tycoon Winston Wang’s (王文洋) idea that the NT dollar should be devalued to NT$40 to halt the decline of exports, Chen said “competition on depreciation rates” was not a good way to deal with the financial crisis.
Exports have plunged more than 40 percent in the past two months, but Chen said the slump should be a “short-term phenomenon.”
In related developments, the Democratic Progressive Party (DPP) caucus called on the Cabinet to provide a clearer explanation of its proposed budget.
DPP Legislator Chiu Yi-ying (邱議瑩) said she had asked for more details from various ministries about the budget plan, but nobody could provide her with sufficient information.
“We are not against the budget plan. We just want to make sure that the money is spent on the right things, in the right places,” she said.
DPP deputy caucus whip Kuan Bi-ling (管碧玲) said the Cabinet must present more detailed information about its proposal, or else the DPP caucus would withdraw from the discussion and budget review.
Chinese Nationalist Party (KMT) caucus whip Lin Yi-shih (林益世), however, said the DPP caucus could request more information from the Executive Yuan when the legislature begins to review the budget proposal.
ADDITIONAL REPORTING BY JIMMY CHUANG AND FLORA WANG