The government plans to take out a loan of nearly NT$500 billion (US$15.16 billion) next year, a record for a single year.
At its weekly meeting yesterday the Cabinet finalized the central government budget for next year and suggested seeking a NT$447 billion loan, given that an estimated NT$187.8 billion will be needed to support the approximately NT$100 billion needed for post-Typhoon Morakot reconstruction work.
The proposed loan would be “a record high,” Directorate General of Budget, Accounting and Statistics (DGBAS) Minister Shih Su-mei (石素梅) said.
This year’s loan was NT$421.7 billion.
The loan is needed to provide NT$189.1 billion to meet the shortfall between annual expenditure and income, NT$66 billion would go to pay off the principal on government debt, NT$192.2 billion would finance the second year of the four-year public construction plan aimed at stimulating the economy and NT$20 billion would be used for water management at Shihmen Reservoir (石門水庫) and management plans for flood-prone areas.
Should the special statute for post-disaster reconstruction work — set at NT$100 billion — be approved by the legislature, the government is expected to take out a loan of NT$60 billion and sell state-owned shares to raise the rest of the money.
Government debt was expected to reach NT$4.6 trillion by the end of next year, an increase of NT$510 billion from this year, DGBAS said.
Despite the surge in expenditure, the government managed to abide by the Public Debt Act (公共債務法), which sets the public debt ceiling at 15 percent of the annual budget, because the NT$192.2 billion for the economic-booster plan, the NT$20 billion for water projects and the yet-to-be finalized NT$60 billion loan are to be raised as special budgets not subject to the cap.
Combined, the NT$189.1 billion and NT$66 billion account for 14.7 percent of budgeted spending, Shih said.
The annual revenue for next year’s central government budget is set at NT$1.55 trillion, a decrease of NT$121.2 billion, or 7.3 percent, from this year, and the scale of its spending next year is set at NT$1.74 trillion, a decrease of NT$69.9 billion, or 3.9 percent, from this year, the DGBAS said.
Also See: Taiwan’s economy shrank 7.4% in Q2